14ASC 275 RISKS AND UNCERTAINTIES

PERSPECTIVE AND ISSUES

Subtopic

ASU 275, Risks and Uncertainties, contains one subtopic:

  • ASU 275-10, Overall, that provides guidance on disclosures of risks and uncertainties inherent in entity’s operations and activities in cases where principal operations have not begun.

This topic recognizes that all entities face risk and uncertainty. This topic is meant to provide users with an early warning about any issues with key information. The objective of ASC 275 is to provide guidelines that will enable the preparer to screen the many risks and uncertainties faced by entities and focus on those most useful to the readers of the particular entity’s report—those that will enable the readers to assess the future cash flows and result of operations. Thus, the topic focuses on screening criteria for risks and uncertainties and the resulting required disclosures. It looks at risks and uncertainties arising internally as well as those arising from changes in the industry and economic environment.

Scope and Scope Exceptions

The guidance applies to all GAAP financial statements, interim and annual, but not to condensed or summarized financial statements. The guidance does not apply to risks and uncertainties associated with:

  • Management or key personnel
  • Proposed changes in accounting principles
  • Deficiencies in the internal control structure
  • The possible effects of acts of God, war, or sudden catastrophes.
  • (ASC 275-10-15-4)

The Codification points ...

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