Categorized in: BARS

Tags: BARS ManualGAAPguidance

The 2019 Budgeting, Accounting and Reporting System (BARS) update for entities that report using generally accepted accounting principles (GAAP) has a new section on accounting for “contingencies and litigations,” and we encourage you to check it out. It includes a comprehensive chart that will help financial statement preparers more quickly assess potential accounting and disclosure requirements. It also includes guidance on how to handle expected insurance recoveries related to a contingent liability.

Financial statement preparers should evaluate various contingencies and determine if they need to be accounted for or disclosed in the financial statements. They should also continue to monitor for changes related to contingencies, up to the issuance date of the financial statement report, because preparers might need to adjust the financial statements.

For example, financial statement preparers should work closely with their government’s legal counsel to determine if litigation exists that extends through or arises after the balance sheet date. Further, legal counsel should keep the financial statement preparers updated if changes occur, such as reaching a settlement in a case being litigated against the government. These situations could result in an adjustment to the financial statements, a required note disclosure, or both.

Resources

If you would like to review the authoritative guidance on this topic, you can access the Government Accounting Standards Board codification free of charge by going to gars.gasb.org (sign up for a free account). The authoritative guidance is located in section C50 for Claims and Judgements. 

The GAAP BARS Manual provides guidance to local governments on this topic:

Share this on social!
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
« back to Audit Connection Home

Categorized in: BARS

Tags: BARS ManualGAAPguidance