Under New FASB Ruling, Stock Options to Be Valued and Expensed.  Value for Expensing, Under Sarbanes-Oxley and California Rule 101, Generally to be Based on a Value Determined by an Independent Valuator, Not a Company's Board of Directors or Current Accounting Firm.

Cupertino, CA — December 21, 2004 —FASB (Financial Accounting Standards Board) meet Sarbanes-Oxley and California State Board of Accountancy Independence Rule 101.  The long awaited final ruling on expensing stock options was issued Friday, December 17th, 2004.  Specifically for privately held companies, stock options need to be expensed starting with year-ends after December 15, 2005. Publicly held companies need to be in compliance some months earlier than December 15, 2005.

Who will determine the value of a company's options to be expensed?  "Not the company's current accounting firm," says Dirk Van Dyke, director of valuation services for ValueNomics.  This is where Sarbanes-Oxley and Rule 101 will come into play. Says Van Dyke, "It is important to understand that qualifying companies, public or private, should not engage their accounting firm performing assurance work, to prepare the valuation of the options for expensing.  In addition to the rules created by Sarbanes-Oxley, in California CPA firms must comply with the State Board of Accountancy's Independence Rule 101 and not conduct services where there is even so much as an appearance of a lack of independence."

In addition to the requirement of having stock independently valued, there are reasons not to put off compliance.  Greg Tesone, of ValueNomics San Diego office, says, "Putting off the valuation of companies stock options for expensing will only cost the company more fees in the long run due to a log jam as deadlines approach. The proof of this is in the delays and increased costs being created by Sarbanes-Oxley's Sec. 404 compliance. The smart board and management team will get going early, select valuation firms having passed SAS 73 reviews and either come up with an alternative to incentive stock options for their employees, or they will get going and just get it over with."

About ValueNomics Research, Inc.
Headquartered in Silicon Valley's Cupertino, California, with offices in San Diego, California, ValueNomics Research, Inc., has been providing a wide range of valuation services to nearly 1,000 businesses and individuals for over a decade.