FASB seeks to encourage litigation

The Economist reports:

IT IS as if every homeowner were obliged to publish a map showing burglars the easiest way into his house and where his valuables are stored. That is how American businesses view a proposal that the Financial Accounting Standards Board (FASB) floated in July. The FASB wants to force firms to publish detailed information about what they might get sued for and how much it might cost them. This would provide a how-to guide for lawyers looking for targets. . .

Worse, companies would have to keep an eye out even for the “remote” possibility of expensive litigation: for example, by watching scientific journals for findings that could later result in lawsuits. Then, once a proceeding has begun, the FASB rules would have companies reporting expert testimony on the potential liabilities they face. It would also force them to reveal, in certain circumstances, the amount of insurance they have bought to cover potential damages.

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