Dear brothers and sisters,            July 14, 2009;

 

Assalaamu Alaikum Wa Rahmathullahi Wa Bharakhathuhu.

 

The current economic crisis -- in our opinion caused by the change in accounting standard effective November 15, 2007 -- has produced an incredible situation.

 

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Crisis spurs people to work for free - good or bad?

Mon Jul 13, 2009 11:54am EDT

 

NEW YORK (Reuters) - With U.S. unemployment at a 20-year high, some Americans are working for free while looking for a job, but experts are split over whether it is a sign of dedication or desperation.

 

Unpaid job seekers can keep their resumes fresh by boosting their experience and learning new skills, experts say, but others warn businesses may take advantage of the jobless and that it is illegal for commercial companies not to pay workers.

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Inshah Allah we would like to show that 'IOU Share Option' is a way for the commercial companies to accept 'free work' offering deferred legal compensation without violating the law. We hope by this suggestion to help the unemployed get better jobs as soon as the economy improves.

 

Before that we like to inform about a help to get a good job soon. The site http://www.unitedwework.org/ is commented upon as below.

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Tuesday, July 14, 2009

 

Kerr said that the site has about 350,000 jobs in its database and that he hopes to increase the listings to 500,000 by the end of the week. He said the jobs are culled from corporate Web sites.

 

QuietAgent had helped some of the country's biggest companies about a year ago to create a network to share job applicants, Kerr said. Here's how it worked: Sears might get 100 applications for a single job posting. Once it has filled the slot, it could pass on the other 99 applications to other companies in the network. Sears could also access other companies' unhired applicants.

 

But that network was designed for fee-paying recruiters, Kerr said. United We Work uses a similar database but allows job seekers to post their résumés and search for positions. Large companies can sign up to post positions free until the end of the year, while small businesses can access it for free until July 2010.

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Share options are not new. They were given to retain crucial skills in the companies by giving the option to buy the shares of a company at a price prevailing on the day the options were offered at a later date irrespective of the price on the day of purchase. The IRS considered the share options as income at the hands of the employees and they were to pay the taxes on the year they were given the options whether they acquired the shares or not. We cannot extend the scheme of offering share options now to the unemployed working-for-free as the tax burden cannot be met by them.

 

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Money woes in the most populous US state have given birth to an impromptu trading market for the newest of American financial instruments – the California IOU.

 

Encumbered by a $26bn (£16bn) budget shortfall and a seemingly intractable political stalemate, California's state government is issuing IOUs to businesses, health clinics, college students and taxpayers who are owed money by the state.

 

The green documents look like any ordinary cheque except for the words "registered warrant" stamped in the corner. They carry a 3.75% interest rate and can be cashed in October, by which time California's governor, Arnold Schwarzenegger, is hoping that he will have some money.

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Are these IOUs on par with income? We believe they are not based on the following:

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Since the IOUs are not bankable and would not clear through the Federal Reserve System, the IRS could not tax the IOUs until they are redeemed. We extend the same position to the IOUs issued by any entity. An IOU could not be counted until it is redeemed. Thus a 'share option' issued through an IOU could not be treated as income until it is redeemed.

 

On the basis of the above reasoning, we define an 'IOU share option' as below:

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Is there any benefit in getting an 'IOU Share Option?' Yes. It is at the least a formal recognition of the services rendered during the time of crisis to the unemployed worker. It helps the remaining employed workers as well. Since the unemployed worker continues to work, the work load on the remaining employed workers of the company need not increase.

 

Does it benefit the company? Yes, it allows the company to receive the services of willing laid-off employees to continue the work for the company in return for a share of the company and the resulting goodwill.

 

We hope that the companies would accept work from their laid-off employees and give them 'IOU Share Options' as compensation. These 'IOU Share Options' could be redeemed by the employees, whom we expect the companies would reabsorb once the economy improves, at a later date to receive regular 'Share Options.' Those who collected the 'IOU Share Options' from one company but have joined another company would become share holders of their previous employer.

 

Would the economy recover? In our opinion the economy nosedived because of a change in Accounting Standard that made 'mark-to-market' as true value of an asset.

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Status

Issued: September 2006

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What was the definition of 'fair value?'

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... the definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).

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The above definition actually sets the value of an asset at the price of a 'distress sale' in a declining economy, even though it is acceptable in an improving economy. An appropriate definition would be -- exit price or entry price whichever is higher. This is because no individual likes to go through a sale and incur a loss unless it is a distress sale. A normal sale is often made at the entry price or an exit price that is more than the entry price with a profit.

 

We believe the most recent Accounting Standard indirectly restores the definition of 'fair value' to the pracrice followed before November 15, 2007.

Quoting from Accounting Standard 168, we have:

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