THE STOCK OPTIONS SCANDAL: A COMPREHENSIVE GUIDE FOR INTERNAL AUDITORS

At last count, there were nearly 120 companies that had announced potential problems with respect to their accounting for stock options. This article provides an overview of recent problems associated with the granting and reporting of stock options, includes an overview of accounting for stock opti...

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Bibliographic Details
Published in:Internal Auditing 2006-11, Vol.21 (6), p.3
Main Authors: Ivancevich, Susan H, Elikai, Fara, Sawyer, Rebecca
Format: Article
Language:English
Subjects:
Accounting
Corporate governance
Criminal investigations
Earnings per share
Executive compensation
Financial statements
Fines & penalties
Grants
Internal auditors
Investigations
Market prices
SEC regulations
Stock options
Stock prices
Stockholders
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Summary:At last count, there were nearly 120 companies that had announced potential problems with respect to their accounting for stock options. This article provides an overview of recent problems associated with the granting and reporting of stock options, includes an overview of accounting for stock options, highlights some of the high-profile cases currently under investigation, summarizes professional guidance on the issue, and discusses implications for internal auditors. While there are a number of reasons companies may issue stock options to key employees, a popular reason for granting them is to attract and retain talented executives and to motivate them to improve their company's performance, enhance shareholder value, and in effect, align their interests with those of shareholders. Moving forward, internal auditors must continue their vigilance in establishing more effective systems of internal control.
ISSN:0897-0378