Lucas said one of the issues before the EITF was deciding whether or not the terrorist attacks fit the APB-30 (Accounting Principles Board's opinion number 30) "extraordinary" definition: An event that is unusual in its nature and infrequent in its occurence.

 

"APB-30 is not terribly clear on exactly what kind of cost you can, and should include. The consensus position that emerged was that it would be better for financial reporting to not show any extraordinary items for this," said Lucas. "There were certainly some instances where you could argue that they are extraordinary, but we concluded that even in those cases it wouldn't be the most effective way to communicate what the financial statements needed to communicate."

 

Lucas added, "We didn't want [executives] to have to spend significant amounts of time in discussions with auditors and preparers of financial statements deciding exactly which costs should be shown as extraordinary."

 

According to Lucas, the task force was trying to avoid problems with the financial reporting system by making it straightforward, and did this by not making a decision based on a narrow definition of "extraordinary" under APB-30.

 

Note: The recent tragedy has instilled a tremendous sense of cooperation, and a desire by companies to assist with the task of "getting back to business". SmartPros is making the two current "Attack on America" segments, normally only available to subscribers, available to anyone who wishes to view them. Accounting for Recent Losses and Safeguarding Your Assets can be viewed in their entirety at  http://www.fmnonline.com/cpe/demo_index.cfm

 

*    *    *

 

Accounting for Recent Losses, a multimedia CPE program now available with FMN Online and FMN Video subscriptions, further explores factors considered by the EITF, including timing and recognition and other financial reporting considerations. Segment one, Safeguarding Your Assets, is also available on FMN Online.