Jones Automotives granted employee stock options on January 2, 2022, to acquire 100,000 shares of common stock. The exercise price was $25 per share and the vesting period is 4 years. The estimated fair value of the options is $20 per share.

In 2022, Jones experienced a turnover rate of 1.25%. In 2021 and 2020, it experienced a turnover rate of 2% and 3%, respectively. Jones is using an expected forfeiture rate of 12% to calculate the expense for employee stock options. The managers believe that 12% is the most accurate estimate given the current economic environment in the automotive industry as well as the nature of the current pool of employees.

Jones’ EPS for 2022 excluding consideration of these employee stock options is $2.75 per share. The current consensus analyst forecast of EPS for Jones Automotives is $2.15. Jones has 750,000 shares outstanding at the end of 2022.

You are the auditor for Jones Automotives. Will you sign off on the company’s 2022 financial statements to report its stock option expense as currently reported? Why or why not? If not, what case will you make to management to support your view?