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MFA Submits Comment Letter to FASB on the Proposed Accounting Standards Update, Stock Compensation (Topic 718)

MFA submitted a comment letter to the Financial Accounting Standards Board (FASB) regarding the proposed Accounting Standards Update, Compensation — Stock Compensation (Topic 718): Scope Application of Profits Interests Awards.

The letter expresses MFA’s support of the Board’s decision to include a practical example that assists entities in understanding how to determine whether profits interest awards should be accounted for under Topic 718. The illustrative examples make it easier for individuals to apply the scope guidance effectively. 

MFA supports the FASB’s recognition of the need for specific guidelines to determine whether a profit interest award should be treated as a share-based payment agreement or categorized more akin to a cash bonus or profit-sharing arrangement. The current lack of clear guidance has led to inconsistent accounting practices for these types of awards. 

Additionally, MFA concurs with the notion that it would be advantageous for companies to consistently account for economically similar awards. Such consistency in reporting would provide benefits to investors and other individuals responsible for allocating capital.