The effects of Hurricane Katrina will be considered "ordinary events" for financial-reporting purposes, according to published reports of a statement by the Financial Accounting Standards Board.
Accounting officials reportedly said that for an event to qualify as "extraordinary," and to be financially reported as such, it must be "infrequent in occurrence" and "unusual in nature." FASB has maintained that hurricanes along the Gulf Coast occur too frequently to qualify, though a FASB task force meeting in mid-September may decided to discuss the matter further.
The same task force made a similar ruling for the terrorist attacks of Sept. 11, reasoning that it was impossible to separate the economic conditions before the event from the impact of the events on the economy afterwards. Six hurricanes hit the United States last year, and two have hit this year. The damage to the city of New Orleans -- which is located below sea level and has long been considered a prime candidate for severe flooding -- could cost the federal government as much as $100 billion and see the economy lose 400,000 jobs, according to estimates from the Congressional Budget Office.
