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PCAOB Q&A – PCAOB Issues Guidance on Auditing the Fair Value of Share Options Granted to Employees

PCAOB Q&A – PCAOB Issues Guidance on Auditing the Fair Value of Share Options Granted to Employees

by Toby Lucich on October 17, 2006

Washington, DC, October 17, 2006 - The Public Company Accounting Oversight Board today issued staff questions and answers about auditing the fair value of share options granted to employees.

The staff guidance provides direction for auditing a company’s estimation of the fair value of stock options granted to employees pursuant to Statement of Financial Accounting Standards No. 123 (Revised), Share-Based Payment (FAS 123R). FAS 123R became applicable for financial statements of companies with fiscal years ending on or after June 15, 2006.

“I appreciate that many firms currently are auditing the fair value of share options and have developed their auditing approaches using the general principles in the existing auditing literature,” said Tom Ray, PCAOB Chief Auditor and Director of Professional Standards. “The staff’s questions and answers were developed to help auditors apply the existing auditing standards to this area appropriately and consistently, and I encourage auditors to review this guidance as they plan for calendar year-end audits.”

PCAOB Issues Guidance on Auditing the Fair Value of Share Options Granted to Employees

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