FASB Abandons Project To Modify Contingency Disclosure Requirements

On July 9, 2012, the Financial Accounting Standards Board determined to remove from its agenda its project to modify accounting standards related to disclosure of loss contingencies, including litigation. This project was first added to the FASB's agenda in 2007. Since that time, two Exposure Drafts have been released (the first in June 2008 and the second in July 2010) of a proposed Accounting Standards Update to Topic 450 – Contingencies.

The FASB staff noted in materials for the July 9 meeting that the feedback received on both Exposure Drafts was similar. "There was overwhelming opposition to the enhanced loss contingency disclosures," with concerns that the proposed requirements could be prejudicial to the reporting entity's stance in the subject litigation. Such requirements included possible disclosure of "remote" litigation contingencies; a requirement in certain cases to disclose the amount claimed by plaintiff or the amount of damages indicated by the