The FASB's Proposed Amendments to Required Disclosure for Loss Contingencies - What You Need to Know Now about Proposed Changes to FAS 5
July 15, 2008
On July 15, 2008, Cleary Gottlieb partners Alan Beller, former Director of the SEC’s Division of Corporation Finance, Giovanni Prezioso, former General Counsel of the SEC, and Mitchell Lowenthal, a senior partner in Cleary Gottlieb’s litigation practice, hosted a 90 minute webcast on the FASB’s proposed amendments to its loss contingency disclosure requirements under Financial Accounting Standard No. 5.
The FASB recently proposed a new accounting standard that would significantly expand the nature and scope of disclosures required for loss contingencies, including contingencies arising from litigation. As proposed, the amendments would require a company to make information public that potentially could prejudice the company’s ability to litigate effectively pending claims and result in the loss of privilege. These heightened disclosures would be required not only for reasonably possible contingencies that have been asserted or are probable of assertion, but also for any contingency that could have a “severe impact” on the company and be resolved within a year, regardless of probability of loss or status of assertion. Taken together, the proposed changes could significantly compromise a company’s ability to preserve its rights in the litigation process.
What You Will Learn
- What new disclosures would be required for disclosed contingencies?
- When would the new rules require disclosure about unasserted or remote claims?
- Would aggregation of claims be a workable solution for avoiding prejudicial disclosure?
- Is the exemption for prejudicial information broad enough to provide needed relief?
- Impact on attorney client privilege and attorney work product.
- Potential impact on the audit process.
- Process for the commenting on the proposed new standard and deadline for comments.
How to Listen to the Archived Web Seminar
To register for and listen to the archived web seminar, please visit: