The Financial Accounting Standards Board (FASB) recently decided NOT to allow extraordinary treatment of financial statement items relating to the September 11 terrorist attacks. Here is the response to this action from the American Institute of Certified Public Accountants.
The AICPA believes, as do many members of FASB's Emerging Issues Task Force, that the business effects of the September 11th terrorist attacks are extraordinary and conceptually warrant being treated as such in financial reporting statements.
However, because of the very extraordinary nature of the events surrounding September 11th, the complexity of capturing all manner of direct and indirect effects of the attacks, and the need to provide definitive guidance quickly for the quarter ending September 30th, the FASB/s Emerging Issues Task Force chose a practical solution to help ensure reporting comparability across companies and industries. We hope that this step will prevent what might have been many reporting complexities for American businesses affected by the events and help expedite the normalization of business affairs to the extent possible.
"At first blush, this decision is counterintuitive," said Dan Noll, Director of Accounting Standards at the American Institute of Certified Public Accountants. "But when you look more closely at the details, you can understand how hard it would be for many companies to apply extraordinary treatment to this situation in today's economy. Moreover, today is October 2. Companies closed their books on September 30th and are looking to apply this guidance right now."
Companies have the opportunity to provide additional information in the Management Discussion and Analysis (for public companies) and Notes to the Financial Statements.