Jonathan D. Weiner]
On July 9, the Financial Accounting Standards Board (FASB) decided to remove its project to modify disclosures of certain loss contingencies from the FASB’s technical agenda. The project, originally undertaken in 2007, sought to address concerns that disclosures about certain loss contingencies (particularly with respect to litigation) under existing guidance did not provide sufficient information in a timely manner to assist financial statement users in assessing the likelihood, timing and amounts of cash flows associated with loss contingencies. The proposed Accounting Standards Update would have replaced the disclosure requirements of Accounting Standards Codification 450 for certain loss contingencies with new, expanded disclosure requirements.
According to the FASB, the proposed modifications, as set forth in the FASB’s 2008 and 2010 Exposure Drafts, met “overwhelming opposition” from stakeholders who provided feedback. Generally speaking, stakeholders expressed concern that additional disclosures would be prejudicial to the reporting entity and would not address the underlying issue, namely a lack of compliance with existing loss contingency disclosure requirements. At the July 9 meeting, a majority of the FASB board members similarly concluded that the existing disclosure requirements under ASC 450 are sufficient.
To view the handout from the July 9 FASB meeting, click here.