FASB Continues Deliberations on Project to Improve and Simplify Accounting for Stock Compensation under FASB ASC Topic 718

On February 4, 2015 the Financial Accounting Standards Board (FASB) continued deliberations on its narrow-scope fast-track project to improve and simplify accounting for stock compensation under FASB Accounting Standards Codification (ASC) Topic 718. The topics for improvement and simplification were identified based on recently completed outreach efforts by the FASB staff as well as the Financial Accounting Foundation’s (FAF) post-implementation review of the overall effectiveness of ASC Topic 718.

The agenda for the February 4 meeting was dominated by the deliberation of transition and disclosure requirements for the proposed changes, which are summarized below. The FASB directed its staff to prepare an Exposure Draft of an Accounting Standards Update (ASU), which is expected to be issued during the second quarter of 2015 followed by a 60-day public comment period. The FASB decided to hold off on determining an effective date for the ASU until feedback is received from the comment period. However, a tentative date suggested by the FASB’s staff was for fiscal years beginning after December 15, 2016, with a 1-year deferral for nonpublic companies.