The differences between U.S. and international accounting rules could affect the way American companies compensate their employees.
Companies that adopt international financial reporting standards will need to reexamine their compensation and employee benefit plans. The switchover from U.S. generally accepted accounting principles to IFRS will not only translate into tweaks regarding how companies account for such programs — but could also change plan design because of the way international rules affect corporate financial statements, according to Deloitte.
"The interplay between the broader impact of the transition to IFRS will require companies to assess their compensation philosophy and plan design," said Deloitte Tax partner Grace Melton during a recent webcast. She says companies will want to review employment agreements to assess how IFRS affects specific levels of executive compensation, as well as the impact on broad-based types of compensation plans.
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