International Financial Reporting Standard 2 (IFRS 2), Share-based Payment

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1 International Financial Reporting Standard 2 (IFRS 2), Share-based Payment By STEPHEN SPECTOR, MA, FCGA This article is part of a series by Brian & Laura Friedrich and Stephen Spector on International Financial Reporting Standards published on PD Net. Snapshot IFRS 2 Overview of the Standard Differences from Canadian GAAP Snapshot First issued February 2004 Subsequent amendments Effective date per IASB 2006, 2008 and 2009 (to reflect changes in a variety of standards) fiscal periods beginning on or after January 1, 2005 Effective date per Canadian Standards Outstanding Exposure Drafts and issues under consideration fiscal periods beginning on or after January 1, none IFRS 2 Objective The objective of IFRS 2 is to specify the financial reporting by an entity when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees ( 1). Scope IFRS 2 applies to all share-based payments, including transactions with employees or other parties to be settled in cash, other assets, or equity instruments of the entity. There are no exceptions to the IFRS, other than for transactions to which other CGA-Canada Technically, IFRS 2 will not be required until fiscal periods beginning on or after January 1, However, except for matters noted at the end of this article, Handbook section 3870 is converged with IFRS 2. Note also that even though section 3870 was issued before IFRS 2, the requirements are almost the same.

2 Standards apply (most often IFRS 3 Business Combinations). IFRS 2 also applies to transfers of equity instruments of the entity s parent, or equity instruments of another entity in the same group as the entity, to parties that have supplied goods or services to the entity. Specifically, IFRS 2 applies (with limited exceptions cited in paragraphs 5 and 6) to: a) equity-settled share-based payment transactions, in which the entity receives goods or services as consideration for equity instruments of the entity (including shares or share options), b) cash-settled share-based payment transactions, in which the entity acquires goods or services by incurring liabilities to the supplier of those goods or services for amounts that are based on the price (or value) of the entity s shares or other equity instruments of the entity, and c) transactions in which the entity receives or acquires goods or services and the terms of the arrangement provide either the entity or the supplier of those goods or services with a choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments ( 2). The general principle of IFRS 2 is that an entity recognizes an expense for goods or services (or an asset, if the goods or services received meet the criteria for recognizing an asset) with the credit entry recognized either in equity or as a liability (depending on the classification of the share-based payment award). The problem for accountants is that the definitions of equity and liability in IFRS 2 are different from those used in IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement. Definitions IFRS 2 places its key definitions in Appendix A. Cash-settled share-based payment transaction: A share-based payment transaction in which an entity acquires goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on the price (or value) of the entity s shares or other equity instruments of the entity. Equity-settled share-based payment transaction: A share-based payment transaction in which an entity receives goods or services as consideration for equity instruments of the entity (including shares or share options). Grant date: The date at which an entity and another party (including an employee) agree to a share-based payment arrangement, beginning when the entity and the counterparty have a shared understanding of the terms and conditions of the arrangement. At grant date, the entity confers on the counterparty the right to cash, other assets, or equity instruments of the entity, if the specified vesting conditions, if any, are met. If that agreement is subject to an approval process (e.g., by shareholders) the grant date is the date when that approval is obtained. Intrinsic value: The difference between the fair value of the shares to which the counterparty has the conditional or unconditional right to subscribe, or to which it has the right to receive, and the price the counterparty is required to pay for those shares. For example, a share option with an exercise price of $50 per share with a fair value of $35 has an intrinsic value of $15. Market condition: The condition upon which the exercise price, vesting or exercisability of an equity instrument depends is related to the market price of the entity s equity instruments, directly or indirectly. For example, attaining a specified share price, a specified intrinsic value, or achieving a specified target that is based on the market price of the entity s equity instruments, relative to an index. International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 2

3 Measurement date: The date at which the fair value of the equity instruments granted is measured for the purposes of this standard. For transactions with employees and others providing similar services, the measurement date is the grant date. For transactions with parties other than employees (and those providing similar services), the measurement date is the date the entity obtains the goods or the counterparty renders service. Non-vesting conditions: Any condition that does not include an explicit requirement to provide services is a non-vesting condition. Share-based payment arrangement: An agreement between an entity and another party (including an employee) to enter into a share-based payment transaction, which entitles the other party to receive cash or other assets of the entity for amounts that are based on the price of the entity s shares or its other equity instruments, or to receive equity instruments of the entity, if the specified vesting conditions, if any, are met. This also applies to transfers of equity instruments of the entity s parent, or equity instruments of another entity in the same group, to parties that have supplied goods or services to the entity. Share-based payment transaction: A transaction in which an entity receives goods or services as consideration for equity instruments of the entity (including shares or share options) or acquires goods or services for amounts that are based on the price of the entity s shares or other equity instruments of the entity. Share option: A contract that gives the holder the right, but not the obligation, to subscribe for an entity s shares at a fixed or determinable price for a specified period. Vest: The counterparty becomes entitled under a share-based payment arrangement, to receive cash, other assets, or equity instruments of an entity. Entitlement is no longer conditional on the satisfaction of any vesting conditions. Vesting conditions: The conditions that determine whether an entity receives the services that entitle the counterparty to receive cash, other assets or equity instruments of the entity under a share-based payment arrangement. Vesting conditions are either service conditions or performance conditions. Service conditions require the counterparty to complete a specified period of service. Performance conditions require the counterparty to complete a specified period of service and specified performance targets to be met. A performance condition might include a market condition. Overview of the standard Recognition An entity must recognize the goods or services received or acquired in a share-based payment transaction when it obtains the goods or as the services are received. The entity will record a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction, or a liability if the goods or services were acquired in a cash-settled share-based payment transaction ( 7). When the goods or services received or acquired in a share-based payment transaction do not qualify for recognition as assets, they are reported as expenses on the statement of profit and loss ( 8). Equity-settled share-based payment transactions For equity-settled share-based payment transactions, IFRS 2 requires an entity to measure the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity is required to measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted ( 10). For transactions with employees and others providing similar services, the entity is required to measure the fair value of the equity instruments granted, because it is typically not possible International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 3

4 to estimate reliably the fair value of employee services received. The fair value of the equity instruments granted is measured at grant date ( 11). Note that IFRS 2 uses a grant date model. Under this model, an entity measures the fair value of share-based payment awards issued to an employee on the grant date. The entity does not adjust the fair value afterwards (even if it becomes more or less valuable or does not ultimately vest), unless the award is modified. This approach may result in an entity recognizing an expense even if the employee receives no benefit. For transactions with parties other than employees (and those providing similar services), there is a rebuttable presumption that the fair value of the goods or services received can be estimated reliably. That fair value is measured at the date the entity obtains the goods or the counterparty renders service. In rare cases, if the presumption is rebutted, the transaction is measured by reference to the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders service ( 13). Transactions for services If the equity instruments granted vest immediately (the counterparty is not required to complete a specified period of service before becoming unconditionally entitled to those equity instruments), the entity deems the services rendered by the counterparty (the consideration for the equity instruments) as being received. In this case, the entity recognizes on grant date the services received in full, with a corresponding increase in equity ( 14). If the equity instruments granted do not vest until the counterparty completes a specified period of service, the services to be rendered by the counterparty are assumed to be received in the future i.e., during the vesting period. The entity accounts for those services as they are rendered by the counterparty during the vesting period, with a corresponding increase in equity ( 15). Fair value IFRS 2 requires the fair value of equity instruments granted to be based on market prices, if available, and to take into account the terms and conditions upon which those equity instruments were granted ( 16). In the absence of market prices, fair value is estimated, using a valuation technique to estimate what the price of those equity instruments would have been on the measurement date in an arm s length transaction between knowledgeable, willing parties ( 17). Vesting conditions For goods or services measured by reference to the fair value of the equity instruments granted, IFRS 2 specifies that vesting conditions, other than market conditions, are not taken into account when estimating the fair value of the shares or options at the relevant measurement date (as specified above). Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognized for goods or services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognized for goods or services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition (other than a market condition) ( 19). Note that this valuation is based on an estimated number of equity instruments expected to vest, and thus revisions to this estimate are allowed and done on a prospective basis. Note that market conditions are taken into account when estimating the fair value of the equity instruments granted. Therefore, the entity recognizes the goods or services received from a counterparty that satisfies all other vesting conditions, irrespective of whether that market condition is satisfied ( 21). On the other hand, an entity must take into account all non-vesting conditions when estimating the fair value of the equity instruments granted. Therefore, for grants of equity instruments with non-vesting conditions, the entity must recognize the goods or services International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 4

5 received from a counterparty that satisfies all vesting conditions that are not market conditions, irrespective of whether those non-vesting conditions are satisfied ( 21A). Fair value cannot be reliably estimated In rare cases, an entity may be unable to reliably estimate the fair value of the equity instruments granted at the measurement date. In these rare cases only, the entity measures the equity instruments at their intrinsic value, initially at the date the entity obtains the goods or the counterparty renders service and subsequently at the end of each reporting period and at the date of final settlement, with any change in intrinsic value recognized in profit or loss. For a grant of share options, the share-based payment arrangement is finally settled when the options are either exercised, forfeited or lapse. Furthermore, the entity must recognize the goods or services received based on the number of equity instruments that ultimately vest or (where applicable) are ultimately exercised. The entity must revise its estimates if subsequent information indicates that the number of share options expected to vest differs from previous estimates ( 24). If an entity settles a grant of equity instruments to which paragraph 24 has been applied during the vesting period, the entity treats that action as an acceleration of vesting, and it immediately recognizes the amount that would otherwise have been recognized for services received over the remainder of the vesting period. Any payment made on settlement is accounted for as a repurchase of equity instruments except to the extent that the payment exceeds the intrinsic value of the equity instruments, measured at the repurchase date. Any such excess shall be recognized as an expense ( 25). Modifications to terms and conditions IFRS 2 also sets out requirements if the terms and conditions of an option or share grant are modified (e.g., an option is re-priced) or if a grant is cancelled, repurchased or replaced with another grant of equity instruments. Furthermore, irrespective of any modification, cancellation or settlement of a grant of equity instruments to employees, the IFRS generally requires the entity to recognize, as a minimum, the services received measured at the grant date fair value of the equity instruments granted ( 27). If an entity or counterparty can choose whether to meet a non-vesting condition, the entity treats the entity s or counterparty s failure to meet that non-vesting condition during the vesting period as a cancellation ( 28A). If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied): a) The entity accounts for the cancellation or settlement as an acceleration of vesting, and immediately recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. b) Any payment made to the employee on the cancellation or settlement of the grant is accounted for as the repurchase of an equity interest except to the extent that the payment exceeds the fair value of the equity instruments granted, measured at the repurchase date. Any such excess is recognized as an expense. However, if the share-based payment arrangement included liability components, the entity must remeasure the fair value of the liability at the date of cancellation or settlement. Any payment made to settle the liability component is accounted for as an extinguishment of the liability. c) If new equity instruments are granted to the employee and, on the date when those new equity instruments are granted, the entity identifies the new equity instruments granted as replacement equity instruments for the cancelled equity instruments, the entity accounts for the granting of replacement equity instruments in the same way as a modification of the original grant of equity instruments. The incremental fair value granted is the difference between the fair value of the replacement equity instruments and the net fair value of the cancelled equity instruments, at the date the replacement equity instruments are granted. The net fair value of the cancelled equity instruments is their fair value, immediately before the cancellation, less the amount of any payment made to the International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 5

6 employee on cancellation of the equity instruments that is accounted for as a deduction from equity in accordance with (b) above. If the entity does not identify new equity instruments granted as replacement equity instruments for the cancelled equity instruments, the entity shall account for those new equity instruments as a new grant of equity instruments ( 28). Cash-settled share-based payment transactions For cash-settled share-based payment transactions, IFRS 2 requires an entity to measure the goods or services acquired and the liability incurred at the fair value of the liability. Subsequent accounting treatment differs from the grant date model for equity-settled awards for employees in that until the liability is settled, the entity remeasures the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period ( 30). The ultimate cost of a cash-settled award is the cash paid to the counterparty, which is the fair value at settlement date. Until the award is settled, an entity presents the cash-settled award as a liability and not as an element of equity. The entity recognises the services received and the liability for those services as the employees render them. If an employee is not required to provide any service, as is the case for some share appreciation rights, the entity recognizes the expense and liability immediately upon grant date. If the employee is required to provide services over for a specified period in order to vest in the cash-settled award, the entity recognizes the expense and the liability over the vesting period, while reconsidering the likelihood of achieving vesting conditions and remeasuring the fair value of the liability at the end of each reporting period ( 32). Share-based payment transactions with cash alternatives For share-based payment transactions in which the terms of the arrangement provide either the entity or the counterparty with the choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments, the entity must account for that transaction, or the components of that transaction, as a cash-settled share-based payment transaction if, and to the extent that, the entity has incurred a liability to settle in cash or other assets, or as an equity-settled share-based payment transaction if, and to the extent that, no such liability has been incurred ( 34). Share-based payment transactions where the counterparty has a choice of settlement If an entity grants the counterparty the right to choose whether a share-based payment transaction is settled in cash 2 or by issuing equity instruments, the entity has effectively granted a compound financial instrument, which includes a debt component and an equity component ( 35). For transactions with parties other than employees, in which the fair value of the goods or services received is measured directly, the entity measures the equity component of the compound financial instrument as the difference between the fair value of the goods or services received and the fair value of the debt component, at the date when the goods or services are received ( 35). For other transactions, including transactions with employees, the entity measures the fair value of the compound financial instrument at the measurement date, taking into account the terms and conditions on which the rights to cash or equity instruments were granted ( 36). In other words, if the counterparty can choose settlement in either shares or cash, IFRS 2 requires that the award be split into a liability component (the counterparty s right to demand settlement in cash) and an equity component (the counterparty s right to demand settlement in shares). Once split, the entity accounts for the two components separately. 2 References to cash also include other assets of the entity. International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 6

7 Share-based payment transactions where the entity has a choice of settlement If an entity the right to choose whether a share-based payment transaction is settled in cash or by issuing equity instruments, it treats the whole award either as cash-settled or as equity-settled, depending on whether or not the entity has a present obligation to settle in cash, which results in accounting for the award as a liability. An entity has a present obligation to settle in cash, if any of the following apply: the choice of settlement has no commercial substance, an entity has a past practice or stated policy of settling in cash, or an entity generally settles in cash whenever the counterparty asks for cash settlement ( 41). If an entity has a present obligation to settle in cash, the award is treated the same as a cash-settled award ( 42). If an entity does not have a present obligation to settle in cash, the award is treated the same as an equity-settled award ( 43). Specifically: a) If the entity elects to settle in cash, the cash payment is accounted for as the repurchase of an equity interest, except as noted in c) below. b) If the entity elects to settle by issuing equity instruments, no further accounting is required, except as noted in c) below. c) If the entity elects the settlement alternative with the higher fair value, as at the date of settlement, the entity recognizes an additional expense for the excess value given the difference between the cash paid and the fair value of the equity instruments that would otherwise have been issued, or the difference between the fair value of the equity instruments issued and the amount of cash that would otherwise have been paid, whichever is applicable. Disclosures IFRS 2 prescribes various disclosure requirements to enable users of financial statements to understand: a) the nature and extent of share-based payment arrangements that existed during the period ( 44), b) how the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period was determined ( 46), and c) the effect of share-based payment transactions on the entity s profit or loss for the period and on its financial position ( 50). Of these disclosures, it is item (b) that is most critical, especially if the amounts recorded are based on the fair value of the equity instruments granted rather than the fair value of the goods and services received. These disclosures include: the option pricing model used and the inputs to that model, including the weighted average share price, exercise price, expected volatility, option life, expected dividends, the risk-free interest rate and any other inputs to the model, including the method used and the assumptions made to incorporate the effects of expected early exercise, how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility, and whether and how any other features of the option grant were incorporated into the measurement of fair value, such as a market condition ( 47). If fair value was not measured on the basis of an observable market price, an entity must disclose how it was determined ( 47). On the other hand, if the entity has directly measured the fair value of goods or services received during the period, the entity must disclose how that fair value was determined ( 48). International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 7

8 Appendix B As is the case with many other IFRSs, the Appendices are integral parts of the standard. Appendix A cited at the outset of this article supplies the defined terms used in IFRS 2. Appendix B provides application guidance dealing with the determination of the fair value of equity instruments granted. For shares granted to employees, the fair value of the shares is the market price of the entity s shares (or an estimated market price, if the entity s shares are not publicly traded), adjusted to take into account the terms and conditions upon which the shares were granted ( B2). For share options granted to employees, in many cases market prices are not available, because the options granted are subject to terms and conditions that do not apply to traded options. In such instances, the fair value of the options is estimated by applying an option-pricing model ( B4). Paragraphs B6 to B41 then provide detailed guidance on option pricing model inputs, as well as other conditions that are (not) taken into account when deriving fair value. These matters are beyond the purview of this introductory article. However, it is worth considering the issue in light of the following discussion. What s the problem? The key question is How do you assign value to the stock options? In the absence of observable market values, the answer is use an option pricing model. This, in turn, creates a whole host of new problems. Foremost is the fact that the outcome 3 of any option-pricing model is an estimate. The widely-used Black-Scholes model was constructed for options with exact lifetimes, reliable estimates of volatility, and an underlying market in the security that allows an options trader to hedge by buying or selling the underlying stock. Therefore, the Black-Scholes model is inexact for employee options these may not vest for years, may remain open for more years, can be heavily influenced by the activities of the employees themselves, and have other conditions attached to them not normally found in conventional options. Thus, any numbers generated by Black-Scholes must be viewed as estimates. There are also problems related to the underlying assumptions of the Black-Scholes model. The model uses six terms: current market price of the stock, volatility of the price, exercise price of the option, current market rate of interest, term of the option, and dividends. It has been suggested that these and other distortions of the model s foundation render it invalid. While these arguments have merit, adjustments can be made to account for these matters. One assumption is that the stock pays no dividends during the option s life. Most companies pay dividends to their shareholders, so typically, one subtracts the discounted value of a future dividend from the stock price. Another complaint is that European exercise terms are used, where the option can only be exercised on the expiration date. American options can be exercised at any time during their life, making them more valuable due to their greater flexibility. This limitation is not a major concern because very few calls are ever exercised before the last few days of their life. Still a third limitation relates to the assumption that no commissions are charged. Market participants do have to pay a commission to buy or sell options. Even floor traders pay some kind of fee, but it is usually very small. Despite that fact that the fees that individual investors pay is more substantial and can distort the model, fees are simply ignored. Lastly, the model also assumes that the risk free interest rate is known and it remains constant. In reality there is no such thing as the risk-free rate, but the discount rate on government treasury bills with 30 days left until maturity is usually used as a proxy. It is 3 The fair value of an option estimated at the grant date is not subsequently adjusted for changes in the price of the underlying stock or its volatility, the life of the option, dividends on the stock, or the risk-free interest rate assumptions which are quite unrealistic. International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 8

9 argued that during periods of rapidly changing interest rates, these 30-day rates can change often, thereby violating one of the assumptions of the model. However, this concern is mitigated by the fact that interest rate gyrations that would result in numerous changes within a 30-day period are rare. So how do we deal with the conundrum? The valuation question is intractable, especially for a non-liquid option. No model is satisfactory. On the other hand, it has been argued that the binomial tree model is superior to the Black-Scholes approach. The binomial model is an open-form or lattice model. It attempts to measure option value by developing many possible future scenarios, each with its own probability. Each scenario takes into account possible changes in volatility, interest rates and option life. The combination of these outcomes, or iterations, is supposed to result in a more accurate option value. Is it? Well, yes, but is the gain in accuracy worth the extra effort required to derive that accuracy? Only the market can tell us that. Compare the Black-Scholes value to the binomial value for an option on a $100 stock. Using the same volatility for both models means the valuation difference is basically the expected-life input used in the Black-Scholes compared to the exercise factor used in the binomial. The binomial could be higher, lower, or similar to the Black-Scholes. Black-Scholes value for option on $100 stock Binomial value for option on $100 stock If expected life (term) is: Black-Scholes If exercise factor is: Binomial 7 years $ x $ years $ x $ years $ x $30.31 Assumes a $100 stock with a $100 exercise price, a 10 year term, 40% volatility, 5% risk-less rate, and 1% dividend (values not reduced for forfeitures due to employee turnover) Nevertheless, despite the apparent limitations of both the Black-Scholes model and the binomial model, and the fact that the results are at best, estimates, the outputs can be used as a reliable proxy for the value of the option. Differences from Canadian GAAP The move to International Financial Reporting Standards has been much more efficient that it might otherwise be mainly because the Accounting Standards Board began actively converging Canadian GAAP with International GAAP long before the formal adoption of IFRS. The Handbook section dealing with stock-based compensation is a perfect example of this approach. Handbook section 3870 is, for all intents and purposes, identical to IFRS 2, except that IFRS 2: a) does not provide an exemption for the recognition of an expense when an employee share purchase plan provides a discount to employees that does not exceed the per-share amount of share issuance costs that would have been incurred to raise a significant amount of capital by a public offering and is not extended to other holders of the same class of shares b) defaults to using the fair value of the non-tradable equity instruments granted if the value of received goods or non-employee service is not reliably measurable c) requires that share-based payments to non-employees be measured at the date the entity obtains the goods or the counterparty renders service d) requires cash-settled share-based payments to be measured at the fair value of the liability not intrinsic value International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 9

10 e) requires the transaction to be accounted for as a cash-settled transaction if the entity has incurred a liability to settle in cash or other assets, or as an equity-settled transaction if no such liability has been incurred, and f) is more detailed about how to deal with a modification of an award. Articles in this series will discuss: IFRS 1 First-time Adoption of IFRS IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 7 Financial Instruments: Disclosures IAS 1 Presentation of Financial Statements IAS 16 Property, Plant and Equipment IAS 27 Consolidated and Separate Financial Statements IAS 32 Financial Instruments: Presentation IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement For a more comprehensive introduction to the adoption of IFRSs, see the online course IFRS 2 Share-based Payment, soon available on PD Net. You must be registered to access and purchase the course. If you are not registered on PD Net, register now it s fast, easy, and free. Brian and Laura Friedrich are the principals of friedrich & friedrich corporation, an accounting research, standards, and education firm. The firm provides policy, procedure, and governance guidance; develops courses, examinations, and other assessments. Brian and Laura have served as authors, curriculum developers, lecturers, exam developers, and markers for numerous CGA and university courses in Canada, China, and the Caribbean and have also presented at IFRS conferences in Ecuador. Their volunteer involvement with the Association has earned them CGA-BC s inaugural Ambassador of Distinction Award (2004) and the JM Macbeth Award for service at the chapter level (Brian in 2006 and Laura in 2007). Stephen Spector is a Lecturer currently teaching Financial and Managerial Accounting at Simon Fraser University. He became a CGA in 1985 after obtaining his Master of Arts in Economics from SFU in In 1997, CGA-BC presented him with the Harold Clarke Award of Merit for recognition of his service to the By-Laws Committee for In 1999, Stephen received the Fellow Certified General Accountant (FCGA) award for distinguished service to the Canadian accounting profession. He has been on SFU s Faculty of Business Administration s Teaching Honour Roll for May 2004 to April 2005; May 2006 to April 2007, and May 1, 2008 to April 30, In August 2008, he was one of the two annual winners of the Business Faculty s TD Canada Trust Distinguished Teaching Award. Stephen has held a number of volunteer positions with CGA-BC; he currently sits on CGA-BC s board of governors where he is CGA-BC s 2010 Past-President. International Financial Reporting Standard 2 (IFRS 2), Share-based Payment 10

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