Comptroller General's Position On Accounting Standards For Stock Options
How to account for stock options paid to executives is one of the many controversial issues growing out of the recent corporate scandals and collapses. For example, should corporations be required to treat options to executives as an expense? Most agree that new accounting rules are necessary. There is, however, no agreement as to what those rules should be or who should establish them.

Congress is under pressure to write new laws establishing stock option accounting rules. There is also substantial countervailing pressure to keep Congress out of the standard-setting process, and to leave the issue to the Financial Accounting Standards Board and the SEC. The FASB and SEC are now addressing stock option accounting, and there is no reason to doubt their competence or diligence.

The Comptroller General in a GAO report recently recommended that Congress defer any action and let the FASB and SEC try to solve the problem first. In the Comptroller's own words, "In our opinion, the FASB's independent standard-setting process, subject to SEC oversight, should be allowed to proceed in consideration of accounting for stock options."

Winston agrees. This is a complex and important issue. The FASB and the SEC are the experts in the area, not Congress. Lets see if they can solve the problem before Congress intervenes.