Just as companies were expecting some relief from the aggressive audits of Sarbanes-Oxley, regulators have dispatched auditors to dig deeper into corporate stock option grants, looking for evidence of whether grants were doctored to create windfalls for executive compensation.
The Public Company Accounting Oversight Board issued an audit alert giving auditors a roadmap for how to examine option grants in light of past and existing accounting rules. The “audit practice alert”—the first of what PCAOB promises will become a series as emerging issues warrant—doesn’t create any new accounting or auditing rules.
