Repurchase Obligation Financial Reporting Requirements Unlikely to Change

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Thu, Feb 17, 2011
Find me on:

The February 15, 2011 Employee Ownership Update is online and discusses the following:

  • Fifty-Four Percent of 100 Best Places to Work Have Broad-Based Employee Ownership Plans
  • Drafting Equity Compensation Plans
  • Repurchase Obligation and Accounting: No Change in Offing
  • Discounted Registrations for Certified Equity Professional Institute Exam Available to NCEO Members
  • Applications for Principal 10 Best Companies for Employee Financial Security Now Being Sought
  • Should Other People in Your Organization Get Our Email Bulletin?
At one point there was concern that FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity would require that the repurchase obligation should show up as a liability on the balance sheet. We revisited this issue in detail in our Revisiting FAS 150 discussion. The Update discusses how FASB has shelved the project at this time:

Speaking at a recent NCEO Webinar, Rebecca Miller of McGladrey & Pullen said that the Financial Accounting Standards Board has shelved its project on whether the ESOP repurchase obligation should show up as a liability on the balance sheet. The proposal caused a considerable stir in the ESOP community a few years ago. Miller, widely considered the leading expert on accounting for ESOPs, said that the FASB had shelved the project as part of its ongoing effort to meld U.S. and international accounting. Given that no other country has ESOPs, having a separate standard for ESOPs could be challenging. So don't expect any new requirements on this issue any time soon, if ever.

We have discussed how 57% of 2009-100 Best Companies have Broad-Based Ownership. The Update reports that 54% of the 2011-100 Best Companies have a form of Broad-Based Employee Ownership.

Topics: Studies and Statistics, ESOP, Repurchase Obligation, employee stock ownership plan

Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

Keep Your ESOP On Track and On Time
12 Benefits of Incorporating an ESOP in your Business Exit Strategy

Recent Posts