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FASB Backs Off Planned Contingency Disclosures

Tammy Whitehouse | September 25, 2008

The Financial Accounting Standards Board has decided to retreat and regroup from its plan to call for more disclosure about the potential outcomes of contingencies, such as lawsuits and other pending, uncertain events.

Barraged by 239 comment letters to date on its proposal to amend Financial Accounting Statement No. 5: Accounting for Contingencies, FASB has decided to come up with a new model for how it will compel more disclosure. As such, the board plans to spend another year developing a new plan and field testing it before issuing a new proposal.

FASB staff told the board in a meeting this week that preparers and the legal profession generally trounced the proposal out of concern that the compulsory disclosures would compromise...

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