The Financial Accounting Standards Board has decided to delay the implementation of a new standard on loss contingencies after receiving comments from organizations concerned that it would lead to increased litigation.
FASB has extended the deadline for another year to Dec. 15, 2009, giving companies more time to disclose their loss contingencies for liabilities arising from business combinations. The American Bar Association has sent two letters to FASB warning of harmful consequences that could arise from the new standard (see ABA Wants FASB Loss Contingency Standard Delayed). It cautioned that the rules could threaten the attorney-client privilege and the work product doctrine for audits.
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