The Life and Death of the Canadian Contingent Gains and Losses Accounting Standards Project *

In April 1994, the Canadian Accounting Standards Board formally approved a new accounting standard for contingent gains and losses. The new standard would have increased the frequency of recording contingent losses, enabled the accrual of some contingent gains, and enhanced disclosures for all contingencies. The changes would primarily have been achieved by requiring management, and their legal advisers, to make predictions, estimates, and disclosures that the existing accounting standard enabled them to avoid. Over two years later, and following numerous changes to the implementation date, the board ultimately decided not to release the new standard, and in July 1999, formally abandoned the contingencies project. This study provides a telling of the standard's genesis, development, and ultimate demise, which should prove instructive to those parties with an interest and a stake in accounting standard setting.