TEI comments on FASB employee share-based payment accounting rules.

• Position: Tax Executives Institute, Financial Accounting Standards Board

On August 14,2015, TEI submitted comments to the FASB concerning proposed improvements to the employee share-based payment accounting rules-Topic 718. TEI's comments focus on the FASB's proposal to account for excess tax benefits and excess tax deficiencies arising from employee stock compensation directly in earnings (the Earnings Approach). The Institute strongly recommended that the FASB not adopt the proposed Earnings Approach, but instead make simplifying adjustments to the existing APIC accounting rules. TEI's comments were prepared by TEI's Financial Reporting Committee, whose chair is Eric Johnson. Patrick Evans, TEI's Chief Tax Counsel, coordinated preparation of the comments.

On June 8, 2015, the Financial Accounting Standards Board (FASB) released an exposure draft of proposed improvements to the share-based payment accounting rules--Topic 718 (the Proposed Update). The Proposed Update is part of the FASB's ongoing simplification initiative launched in June 2014 to reduce cost and complexity of complying with U.S. Generally Accepted Accounting Principles while maintaining or improving the usefulness of information provided to users of financial statements. Tax Executives Institute (TEI or the Institute) fully supports the FASB's simplification initiative and is pleased to submit the following comments on the Proposed Update.

TEI Background

TEI is the preeminent worldwide association of corporate tax executives. Our nearly 7,000 members are accountants, attorneys, and other business professionals employed by approximately 3,000 of the leading companies in North and South America, Europe, and Asia. TEI represents a cross-section of the business community and is dedicated to the development and implementation of sound tax policy and tax accounting principles, as well as to promoting the uniform and equitable enforcement of the tax laws. The Institute is proud of its record of working with congressional committees, government agencies, and other policy-making bodies, including the Securities and Exchange Commission (SEC), the Financial Accounting Foundation (FAF), and the FASB on tax and tax accounting matters. These efforts inure to the mutual benefit of the government, business taxpayers, preparers and users of financial statements, and ultimately the public at large.

TEI members are responsible for conducting the tax affairs of their companies, ensuring their compliance with the tax laws, and preparing financial disclosures of tax related matters. Most of the companies represented by our members issue financial statements governed by the FASB's pronouncements, and, of those, most are SEC registrants. For companies governed by other accounting standards, such as International Financial Reporting Standards, the FASB's work is also critical since FASB pronouncements are often referenced by other accounting standards' boards. In addition, they are subject to scrutiny by the Internal Revenue Service and various other agencies in the United States and foreign jurisdictions on a continual basis.

As a professional association of in-house tax executives, TEI offers a unique perspective. Its members work for companies involved in a wide...