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Group cash-settled share-based payment transactions

  • Deloitte Comment Letter Image

19 Mar 2008

Deloitte has submitted a Letter of Comment on the IASB's Exposure Draft IFRS 2: Group and Treasury Share Transactions – Group Cash-settled Share-based Payment Transactions.

The Exposure Draft responds to requests for guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements (referred to by the IASB as group cash-settled share-based payment transactions):
  • Arrangement 1: The entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity
  • Arrangement 2: The entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity's parent
We support the proposal but believe that the IASB is missing an opportunity to develop a principle that has broader application. An excerpt from our letter:

Whilst we support the proposed amendments, we believe that the amendments provide the IASB with an opportunity to develop a principle for the accounting for all types of share-based payment arrangements involving group entities and owners of the entity as a whole. Such an approach would help to avoid issuing interpretations and amendments on the accounting for share-based payment transactions on a piecemeal basis by the Board.

To establish such a principle, we believe that the definition of a 'share-based payment transaction' in Appendix A of IFRS 2 should be amended to clarify that share-based payments involving group entities meet that definition.

We also encourage the Board to consider addressing situations where linkage of separate transactions may be appropriate in share-based payment transactions involving group entities.

All of our Past Letters of Comment to the IASB are here.

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