Proposal urges firms to tell it like it really is

A proposal from the British Accounting Standards Board this week will give many technology start-ups pause for thought. It is urging that the value of shares and options given to employees and others should be set against profits to give a more accurate idea of company performance.

It says the motivation is to stop companies essentially distorting balance sheets by using such options to effectively pay their staff. Of course, that is precisely what many start-ups are doing. With growing pressure on funds and an ongoing struggle for many to reach profit, options allow them to reward the faith of employees investing in the future of what are very fragile operations. "These things have value and they are not being charged," said the chairman of the body Sir David Tweedie. "In some industries, it is going to reveal what is going on." No kidding.