The Financial Accounting Standards Board once again finds itself on the horns of a dilemma.At issue are proposed amendments to Financial Accounting Standard 5, on disclosure of loss contingencies. If adopted as presented in an exposure draft issued earlier this year, the amended standard would require companies to disclose the extent of their exposure to loss in lawsuits and environmental matters, including not only the amount of litigation claims, but also of predicted court costs and possible punitive damages.
While this information might be of great interest to investors and other users of financial reports, it would also be of great interest to plaintiff attorneys, who could introduce the information in court as evidence of a company's implied acceptance of guilt.
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