The Financial Accounting Standards Board suspended deliberations in November on its project to improve disclosure of loss contingencies, including contingencies relating to litigation. The sigh of relief in the corporate reporting and legal communities was palpable.

Most companies will respond to this development by making no changes to the way they prepare disclosures related to loss contingencies. They figure the bullet has been dodged, at least for now.

That reaction is a mistake. Given the reasons why FASB put the project on hold, the prudent reaction would be to improve disclosures and attempt to address the concerns that led FASB to ...