The Accounting Standards Board has confirmed it will reconsider how to account for employee share option schemes in proposals that it acknowledges will be the most 'controversial' it has yet issued. The proposals are due to be published in June next year and could take effect by 2002. The move was first revealed by Accountancy Age in February, and the ASB's decision followed an announcement by retail chemist Boots to recognise the costs of buying shares for its employees. The company said it intended to take a £63m charge against its 1998/99 profit-and-loss account to show the cost of buying shares to meet commitments to its employee savings scheme. It said rather than issue new shares to employees, the profit-and-loss account charge reflected Boots' decision to buy them on the open market and would show the difference between the purchase price of the shares and the option price offered to staff. ASB assistant technical director Andrew Lennard said the share issue rules were in need of change. 'We have not published anything yet but it is very much on our agenda and we are trying to get it right,' he said this week. 'We will have our public discussion paper out in the middle of the year at the soonest and take it from there. 'It is going to be the most technically difficult and controversial discussion paper we have drawn up. Ultimately we are trying to clarify the requirements of share issuing. If a company pays for something in shares they should have to call it a cost and make an entry of account. At the moment the requirements are unclear.' He denied real costs would increase, it would only be those that are reported. He added that ultimately, shareholders and anyone with an interest in the progress of a company would benefit, while company accounts would become more transparent. In 1996 the ASB's Urgent Issues Task Force caused controversy when it proposed a similar accounting treatment, but backed down following protests from retail giants including Marks & Spencer and Tesco. Similar proposals were also made in the United States but later watered down under fierce opposition from companies.
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