FASB Releases Proposal on Disclosure of Certain Loss Contingencies
July 26, 2010
On July 20, 2010, FASB released an Exposure Draft on disclosure of certain loss contingencies. The proposed amendments in the Exposure Draft would lower the current disclosure threshold and broaden the current disclosure requirements. For loss contingencies that meet the disclosure threshold, an entity would consider the following principles in determining disclosures that are appropriate for its individual facts and circumstances:
- During early stages of a loss contingency’s life cycle, an entity would disclose information that is available to enable users to understand the loss contingency’s nature, potential magnitude, and potential timing, if known. Available information may be limited and, therefore, disclosure may be less extensive in early stages of a loss contingency. In subsequent reporting periods, disclosure would be more extensive as additional information about a potential unfavorable outcome becomes available.
- An entity may aggregate disclosures about similar contingencies (for example, by class or type) so that the disclosures are understandable and not too detailed. If an entity provides disclosures on an aggregated basis, it would disclose the basis for aggregation.
The amendments would apply to both public and non-public entities, except that non-public entities would not be required to provide a tabular reconciliation of accrued loss contingencies. Comments on the Exposure Draft are due by August 20, 2010.
http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175821001041&blobheader=application%2Fpdf
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