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It's Easy Not Being Green A wide majority of companies that are required to divulge impending environmental liabilities just don't bother, says new academic research.

Sarah Johnson, CFO.com | US
February 18, 2009

Underlay

Underlying Ethics?

Posted by David Newman | Mar 1, 2009 5:26 PM ET

Environmental Liabilities and FAS 5

Setting aside the issue of MD&A disclosure for the moment, the article mixes up two aspects of FAS 5: note disclosure of a contingent liability (e.g. an environmental liability) and accrual in the financial statements.

Note disclosure is required if the probability of occurrence is "reasonably possible" (whatever that means). An estimate of the liability would have to be accrued if it were "probable."

Although disclosure of environmental liabilities in MD&A may not currently be a point of emphasis, it was a significant focus in SEC speeches and elsewhere beginning in the early 1990s and extending up to at least the end of that decade. Sad to say, those speeches, SOX certification requirements and the SEC's rules on disclosure controls and procedures have not had much of an effect.

Posted by Thomas Selling | Feb 18, 2009 4:32 PM ET