India's Shift to IFRS May Impact Employee Stock Options

Employees are being advised to redesign their employee stock options plans or risk cumulative losses on their profit and loss (P&L) accounts under the International Financial Reporting Standards (IFRS) which will be implemented in April this year.


Livemint reports that under Indian GAAP (generally accepted accounting principles), Esops are accounted for at the intrinsic value of the stock options at the time they are granted by the employer. Under IFRS, stock options will be accounted for at fair value, which may be higher than the intrinsic value on the date the Esops are granted.


Many Indian companies offer Esops to their executives. Because of the IFRS many companies, such as Wipro Ltd and Mahindra Ltd, are either redesigning their Esops to minimise costs or offering employees other rewards in place of Esops, says Livemint.







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