Loss Contingencies Face Controversy in Convergence

As part of their short-term convergence project, FASB and the International Accounting Standards Board are currently reviewing their accounting for loss contingencies. Statement of Financial Accounting Standards 5, Accounting for Contingencies, acts as the primary accounting guidance for the accrual...

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Bibliographic Details
Published in:The CPA journal (1975) 2012-01, Vol.82 (1), p.34
Main Authors: Holder, Anthony D, Karim, Khondkar E
Format: Article
Language:English
Subjects:
Accounting firms
Class action lawsuits
Contingencies
Convergence
Disclosure
Exposure drafts
FASB exposure drafts
FASB statements
Financial accounting standards
Financial statements
IASB exposure drafts
International accounting standards
International Financial Reporting Standards
Litigation
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Summary:As part of their short-term convergence project, FASB and the International Accounting Standards Board are currently reviewing their accounting for loss contingencies. Statement of Financial Accounting Standards 5, Accounting for Contingencies, acts as the primary accounting guidance for the accrual or disclosure of loss contingencies. Similarly, International Accounting Standard 37, Provisions, Contingent Liabilities and Contingent Assets, prescribes the recognition, measurement and disclosure requirements for such items. Few convergence topics have generated as much controversy or discussion as this one. This article discusses the viewpoints of both standards-setting bodies, summarizes respondents' reactions, articulates the controversies, and illustrates the practical implications of these findings.
ISSN:0732-8435