Irish high-tech and Internet companies and their accountants should be alert to the significant changes being proposed by the Accounting Standards Board for dealing with share options.

The proposed changes could mean big reductions in the reported profits of companies operating such schemes if the chairman of the Accounting Standards Board, Sir David Tweedie, gets his way.

But they could have serious implications for developing hightech and Internet companies which have limited financial resources for rewarding employees and depend on granting potentially lucrative share options to keep key people on board.

Sir David wants the proposals which would require the value of share options to be charged against profits each year to become enforceable accounting standards within two years. Currently share options are not accounted for in the profit and loss account when they are granted because they are usually related to the performance and because accounting for them is complicated and they are hard to value until they are cashed in.

The changes could affect the save-as-you-earn employee scheme where employees get options to acquire company shares over a savings period as well as executives who get share options as part of their remuneration.

Sir David has dismissed the concern that charging option schemes against profits could cause companies to abandon the schemes. He argues that the schemes should stand or fall on their economic merits and "not on the basis that the accountant looked the other way".