Accountancy and valuation

Accounting

For entities that prepare financial statements under international accounting standards, the share-based payment (SBP) accounting standard (International Financial Reporting Standards (IFRS) 2 (IFRS 2)) sets out the accounting rules for the awards of share options and other equity-based employee incentives. It has been effective for accounting periods since 1 January 2005.

From the same date, very similar accounting rules were brought in for entities that report under UK domestic accounting standards (and US accounting standards). In the UK for SBP accounting, the main relevant domestic standard is now Financial Reporting Standard (FRS) 102 (FRS 102). Since 2005, IFRS 2 has not been fundamentally amended but there have been some changes and the Interpretations Committee (IC) of the International Accounting Standards Board (IASB) has given guidance on its application. The UK standard needs to be interpreted in the light of this guidance as well as the International Standard.