The way companies report contingent liabilities, in particular environmental liabilities, in their financial statements would undergo significant changes if a proposal by the Financial Accounting Standards Board goes into effect.
On June 5, 2008, FASB released for public comment Proposed Statement of Financial Accounting Standards, Disclosure of Certain Loss Contingencies. The proposed standard would significantly expand the quantitative and qualitative disclosure requirements for loss contingencies under SFAS 5 and 141(R). In issuing the draft, FASB is responding to investors and other users of financial statements who are seeking additional information to assess the likelihood, timing, and amount of future cash flows associated with loss contingencies. The proposed standard would be effective for fiscal years ending after December 15, 2008, and interim and annual periods in subsequent fiscal years.
Responses from interested parties wishing to comment on the proposed standard must be received in writing by August 8, 2008. Interested parties should submit their comments by email to firstname.lastname@example.org, File Reference No. 1025-300.
Environmental managers, attorneys, chief financial officers, and accountants should pay attention to how FASB ultimately addresse this issue, and should submit comments if they want to express any concerns to FASB.