"We're pleased to see that the PCAOB has released the guidance, and that it makes clear that the public company auditors have a responsibility under the auditing standards to conduct a wide-ranging inquiry into options abuses,'" Damon Silvers, associate general counsel at the AFL-CIO, told Bloomberg News.

More than 80 companies are under investigation by the Securities and Exchange Commission into whether option grant dates were backdated or otherwise manipulated to maximize executive compensation.

For more coverage on options timing, go to the ISS Options Backdating Information Center.

Also on July 28, Mark Everson, commissioner of the Internal Revenue Service, directed the agency's audit staff to work with the SEC to scrutinize companies to see if they owe taxes for improper option grants. Everson said the IRS would look at 30 to 40 companies.

"In light of recent troubling reports of misconduct in connection with the backdating of stock options, the IRS will examine relevant cases to determine that both the companies and executives involved satisfied their tax obligations,'" Everson said in a statement.

Meanwhile, more companies have disclosed reviews of their option grants. On Aug. 3, Florida-based Pediatrix Medical Group delayed reporting its full quarterly results and said its audit committee is reviewing past option grants. A day earlier, Ceradyne, a California firm that makes body armor, said a board committee would review option grants from 1997 to the present. Activision, a maker of video games, said July 28 that the SEC had begun an inquiry into the California-based company's option grants.

On July 31, CA Inc., the world's No. 2 seller of software for mainframe computers, reported that many options were improperly priced before 2002, resulting in an additional expense of $342 million. On Aug. 3, Clorox, a California company that sells bleach and other household products, reported that errors in accounting for past option grants had resulted in a $16 million expense.

Mercury Interactive, where three top executives quit last November after an options probe, announced Aug. 1 that former CEO Ammon Landan reached a legal settlement and agreed to give up options to buy 437,500 shares that he was granted in January 2003, according to the Silicon Valley/San Jose Business Journal. The company previously voided 2.6 million of Landan's options. Mercury has restated its results from 2003, 2004, and 2005, and reported $566.7 million less income. Mercury said it expects to spend $70 million in legal expenses as it deals with past option grants.

Earlier, Moody's Investor Service said it would consider downgrading the credit ratings of firms that are under scrutiny for their option grants. Moody's has already lowered its ratings on bonds issued by CA, Jabil Circuit, Newpark Resources, and UnitedHealth Group.

"Companies that have stock option problems also are likely to have other corporate governance problems," Jeffrey Benner, an analyst at Moody's, told Bloomberg News.