FASB delays proposed new Statement No. 5
By Cydney Posner
As you may recall, in June, the FASB had issued a new exposure draft proposing significant amendments to Statement No. 5, Disclosure of Certain Loss Contingencies, that would have expanded both the number and type of loss contingencies required to be disclosed in financial statements and the extent of disclosure of specific quantitative and qualitative information about those loss contingencies. The proposal, which would have been effective for annual financial statements ending after December 15, 2008, created enough of a stir that, as described in an article from Accounting Research Manager, FASB decided to delay issuance of a final standard. To address serious concerns raised in the comment process regarding potential disclosure of prejudicial information and waiver of attorney-client privilege, the FASB will now work to develop and field test an alternate model. As a result, it is expected that any final standard would be delayed for at least one year, to apply to fiscal years ending after December 15, 2009.