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September 07, 2010


David Albrecht


This is a really good post. You really do a fine job of writing about the issues.

I think you could also have tied this new ED to the ED on contingent liabilities. It is clear to me that a majority of the old 5 member FASB is in favor of accruing total liability cost.

In most published commentary (i.e., ABA), the focus has been on the litigation outcome. However, litigation cost is an unstated but major cost of the litigation process. Because it has been decided that all litigation (current and long-term) should be included as current expense (and associated liability), I think all companies will soon discover the necessity of accruing all expenditures.

I've previously written about the stupidity of the proposed rule on contingencies. I think the accrual of future legal expenditures is simply an additional unintended consequence.

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