Today’s the deadline for filing comments on the Financial Accounting Standards Board’s proposal to require reporting on contingent legal liabilities in accounting statements. (FASB news release and proposed statement.)
We point again to the NAM’s comment letter to highlight the proposal’s shortcomings: “We believe the proposed standard would lead to less accurate and less useful information for investors, threatening the attorney-client privilege and the attorney work product doctrine, unnecessarily provide information to potential claimants, and force corporate defendants to disclose privileged information to plaintiffs thereby jeopardizing their ability to defend the litigation.”
Along with businesses and stockholders who would be affected by these perhaps well-intentioned but poorly framed requirements, the legal community — and not just corporate lawyers — is critical of the FASB proposal. The FEI Financial Reporting Blog has a good review of the reaction at this post, “Legal Community Raises Alarm On FAS 5, Contingencies: Comment Deadline Aug. 8.”
Financial Week reports the proposed FASB rules would hit some sectors of the economy harder than others — big companies that get sued a lot (no surprise there) — including companies with large intellectual property portfolios.
And it’s worth noting again this good overview from The Recorder, “GCs Bristle at Proposed Disclosure Rules.” GCs being general counsels.
FASB’s online commentary site has added some 30 new comments over the last day, and is up to 69 as of this morning. From the informed sample we’ve taken, looks like the overwhelming majority is critical of the proposal for many of the reasons cited above.
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