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Amending FAS 5 -- An Update

By James M. Beck and Mark Herrmann

The Financial Accounting Standards Advisory Council held a public meeting yesterday to discuss the proposed amendment to FAS 5, which deals with the disclosures that publicly traded companies must make about litigation. (We previously posted on that topic this summer.)

Here's a link to the agenda for that meeting.

We've heard through the grapevine that FASB is now considering an alternative to the original proposed amendment to FAS 5. Under the alternative, companies would have to disclose the nature of a claim, a qualitative description of the potential effect of a negative outcome on operations and liquidity, historical information on the outcome of similar claims, information about the proposed class period for class action securities litigation, and any information available from independent studies. The proposal will also have an exception saying that no prejudicial information need be disclosed.

FASB hopes to release the revised proposed amendment in the second quarter of 2009.

Full post as published by Drug and Device Law on December 16, 2008 (boomark / email).