Let your stomach rule your head.

(From Financial Director)

Byline: Robert Bruce, a leading commentator on accountancy issues.

There comes a time in every business period when a financial director has to do things simply because they feel right, and not because the financial jargon or technical complexities say otherwise. Speaking at the CIMA annual conference in mid-November the chief auditor at Unilever, James Duckworth, provided a powerful analysis of how Unilever manages risk. In particular he talked about the system they have of top down/bottom up in assessing where risks lie in the business. Managers are quizzed on what risks their divisions face and how important these risks are. Duckworth argued that at times this should not be reduced to an analytical process alone. Managers, he suggested, should not always state clinically how serious a particular risk might be. They should say how their stomachs felt when standing up and saying how dangerous a future risk might be.

There's a lot to be said for gut feel versus corporate systems when assessing challenging issues. One area which will benefit from such an approach is the question of accounting for share-based payments, share options to you and me. The American corporate sector has never liked the idea of accounting for them. So much so that when in 1994 the American standard-setters, the FASB, put forward proposals for showing options as an expense, corporate America put together some GBP 70m as a fighting fund to get the idea over-turned.

It may seem bizarre but that is how accounting standards excite Americans.

There were even demonstrations in the street. It's hard to imagine a society where financial directors exhort their colleagues to take to the streets to demonstrate about accounting standards. But America can be a very strange place sometimes.

But they have not all taken leave of their senses. The great investment guru Warren Buffett came up with the definitive comment on stock options almost ten years ago and you do wonder why anyone has been arguing over the rights and wrongs of expensing them ever since. What he said was simple.