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Regulators Consider New Warning Measures for Troubled Companies

Tammy Whitehouse | November 8, 2011

After a string of corporate failures that seemed to come out of nowhere, regulators are considering reporting mechanisms to warn investors that a company is in trouble. One central question: What should trigger such a warning?

The Financial Accounting Standards Board is reviewing accounting measures that would signal to investors that a company may have trouble paying its bills in the near future. And along the way, FASB may draw others in Washington into the dialogue, most notably the Securities and Exchange Commission and the Public Company Accounting Oversight Board. FASB still isn't sure whether it should write accounting rules requiring new disclosures—and if so, what those disclosures should be.

Auditors already are required under AU Section 341, Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, to give some thought to... To get the full story, subscribe now.