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Financial Reporting & your employee share plans: how to stay compliant

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Expense filing. Disclosures. Deferred tax and EPS reporting. US GAAP and ASC 718 compliance. IFRS 2.

Do these sound familiar to you? If they do, then they probably don’t sound fun to you.

All of the items listed above are necessary, complicated, and extremely time-consuming aspects of financial reporting.

But with Global Shares’ Financial Reporting, you don’t need to worry about adding this to your extremely long to-do list. Now, you can have a team of experts do it for you – all you need to do is push a button.

Our financial reporting functionality is weaved into our employee share plan management system. This means that everything that happens in your share plan – vest events, forfeitures, transactions, etc. – impacts your financial reports immediately. Valuation, expense accrual – whatever report you’re running, you know it’s up-to-the-minute.

We support a large suite of reports, including:

  • Fair Value Reporting
  • Expense Reporting
  • Deferred Tax Reporting
  • Earnings per Share Reporting
  • Disclosure Reporting
  • Group Share-Based Payments
  • Group Recharge Reporting

And our reports come with a number of functions, to ensure they’re top-of-the-line.

 

Fair Value Valuation

Determining fair value can be tricky. Option-based awards, Restricted Shares, what are they all worth? That’s why for both, we have both system-generated (Black-Scholes Model, intrinsic value, etc.) and imported valuation methods available.

It’s never been easier to run expense reports. If you’re determining how expenses are amortized over an award’s service period, you can use either the straight line (pure and modified) or the front-loaded attribution method.

 

Treatment of Forfeitures

Different participants have different expectations – namely, forfeiture assumptions. With our reports, each participant can be assigned to an assumption group with an assigned estimated forfeiture rate. Any changes during the expense period are taken into account.

You have a choice of forfeiture rate application methods – non-hyperbolic (static) or hyperbolic (dynamic).

 

Accounting for Tax Effects

Participants are assigned to a tax entity with individual effective rates, and changes in tax rates, as well as participant movement between entities, is tracked with an effective date. In addition to summary accounting entry reports, detail tracking and transaction reports are available to download.

 

Earnings per Share

It’s difficult to compute basic and diluted earnings per share. You need to calculate the assumed proceeds and resulting incremental shares based on the average market price and…

Well, actually, all you need to do is click. Our system takes care of everything.

 

Disclosures

Our system provides both detailed and summary disclosure reports, allowing you easy transparency, as well as satisfying the accounting standard requirements. And when we say detailed, we mean detailed:

  • The nature and terms of share-based arrangements that existed during the period
  • The method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted (or offered to grant) during the period
  • The effect of compensation cost arising from share-based payment arrangements on the income statement
  • The cash flow effects resulting from share-based payment arrangement

At this point, some of you – even those who deal with financial reports – might be wondering what some of these functions are, or just how much they can help you.

Don’t worry. Our dedicated Financial Reporting team is constantly working for you.

Whether it’s monitoring changes in the Global Accounting Standards, such as US GAAP and IFRS, or providing assistance with client and auditor queries, they’re a part of your team. Because you need to keep your compliance as up-to-date as your reports.

If you’re lost in the woods of financial reporting, contact us to speak to an equity compensation expert today.

Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.

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