Post Implementation Review Concludes Share-Based Payment Standard Achieves Purpose

FASB Issues Response Letter, Continues Outreach To Identify Improvements

Norwalk, CT, August 19, 2014—
A 2004 accounting standard that addresses companies´ share-based payment transactions achieves its purpose and provides useful information to users of financial statements.

That was the central conclusion of the post-implementation review (PIR) of Financial Accounting Standards Board (FASB) Statement No. 123(R), Share-Based Payment. Statement 123R focuses on accounting for transactions in which a public or private company exchanges its equity instruments for employee services. It also addresses transactions in which a company incurs liabilities in exchange for goods or services that are based on the fair value of its equity instruments, or that may be settled by the issuance of those equity instruments.

"The post-implementation review report on Statement 123(R) identified many positive aspects of the share-based payment standard, including its usefulness to investors," said FASB Chairman Russell G. Golden. "Private company stakeholders told the PIR team that the standard is sometimes difficult to understand and costly to apply. This feedback is consistent with input the FASB recently received from stakeholders through outreach for the FASB´s Simplification Initiative and for pre-agenda research for the Private Company Council (PCC).

"Although we do not plan to undertake a comprehensive review of the standard, we will continue our outreach to stakeholders to identify improvements to account for share-based payment transactions. The FASB staff will bring the results of the outreach to the Board and the PCC later this year for discussion," Golden said.

The PIR team received input from investors and other financial statement users, as well as from preparers, auditors, and academics. Based on its research, the review team concluded: The PIR team had no significant standard-setting process recommendations as a result of the review.

The review of Statement 123(R) was undertaken by an independent team of the Financial Accounting Foundation (FAF), the parent organization of the FASB and the Governmental Accounting Standards Board (GASB). The team´s formal report is available here. The FASB´s response letter to the report is available here.

With the completion of the FAS 123(R) review, the PIR team will begin their review of FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, in a few weeks.

Stakeholders who would like the opportunity to participate in upcoming PIRs should register online.

For more information on the PIR process, visit the FAF website.

About the Financial Accounting Foundation

The FAF is responsible for the oversight, administration, and finances of both the Financial Accounting Standards Board (FASB) and its counterpart for state and local government, the Governmental Accounting Standards Board (GASB). The Foundation is also responsible for selecting the members of both Boards and their respective Advisory Councils.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at