Financial Accounting Blog

Saturday, January 24, 2004

Off-Balance Sheet Financing. reports that the SEC and FASB will implement stricter standards regarding off-balance sheet arrangements.
The new MD&A final rule lowers the disclosure threshold for reporting off-balance-sheet arrangements, contractual obligations, and contingent liabilities in annual reports. Disclosure is currently required only when there is a "reasonable likelihood" that an off-balance-sheet transaction has a current effect on the company's financial expenditures or capital resources, or will have such an effect in the future. Under the new standard, disclosure is required if there is so much as a "remote" chance that the transaction will have such an effect.