FASB delays highly controversial proposal on contingency disclosures: creating alternative model for comparison.

• Position: Issue UPDATE

FASB Statement No. 5, Accounting for Contingencies and FASB Statement No. 141(R), Business Combinations, will be effective no sooner than fiscal years ending after Dec. 15, 2009--a delay of at least one year.

The proposed standard is intended to amend the loss contingency disclosures currently required by FASB Statements 5 and 141(R). The proposed amendments to these statements would increase the amount of information that publicly traded companies are required to disclose about pending or threatened litigation.

After receiving comments on the exposure draft from more than 200 businesses and individuals, FASB is preparing an alternative model to address concerns. This model will be field tested along with the model in the exposure draft.

"The decision of the FASB to re-examine and further test this proposal is prudent and necessary," said Gary L. Sandefur, CPA, a member of the OSCPA Accounting & Auditing Committee. "The major issue with the exposure draft lies with potential or pending lawsuits, and the proposed requirement in literally reveal and quantify your thinking and evaluation in expanded proforma disclosures."

In its letter of comment, The Ohio Society's A&A Committee said, "The proposed draft seeks to expand disclosures not meaningful to financial statement users with detail and estimate information for contingencies not likely to significantly...