Several organizations are criticizing a proposed standard on accounting for loss contingencies, saying it could lead to possible abuses, including a flurry of spurious lawsuits.
The proposed amendments to FASB Statements 5 and 141(R) would increase the amount of information that publicly traded companies are required to disclose about pending or threatened litigation. The U.S. Chamber of Commerce sent a
"This proposed rule is nothing but a solution in search of a problem," said David T. Hirschman, president of the U.S. Chamber Center for Capital Markets Competitiveness. "The changes would invite excessive and abusive lawsuits against public companies and hurt U.S. global competitiveness."
The American Bar Association also sent a comment letter to FASB describing its own "serious concerns" with the proposed changes.
"The exposure draft, particularly as applied to contingencies arising from pending and threatened legal claims, raises a number of problems and will likely have unintended but seriously adverse consequences for reporting entities," said the
Financial Executives International also registered its objections in a