Law360, New York (October 14, 2010) -- Investors have expressed concern in recent years about the adequacy of companies’ financial statement disclosures of nonfinancial loss contingencies, including claims arising from litigation. In response to this criticism, the Financial Accounting Standards Board (FASB) undertook a project to improve disclosure requirements and guidance in this area.
The FASB’s initial exposure draft was issued in June 2008 and, after extensive comments and roundtable discussions, the revised draft was issued in July 2010.[1] The stated objective was to require sufficient qualitative and quantitative information about loss contingencies to enable users of financial statements to understand the nature of the loss contingencies as well as their potential magnitude and timing.
The comment period for the revised draft expired Sept. 20, 2010; 320 comment letters were submitted, many of which indicated that the revised draft may still be problematic in a number of areas. Below are five issues that, based upon comment letters to the FASB, appear to be of special concern to lawyers and accountants.
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