The Financial Accounting Standards Board took a step back into old accounting literature to amend its new standard on accounting for business combinations.

FASB published new guidance related to Financial Accounting Statement No. 141R, Business Combinations, to change the requirements around accounting for contingencies acquired in a business combination. That might include pending legal actions or other unresolved issues where the outcome is uncertain but could result in a future asset or liability on the books.

When FASB originally issued FAS 141R in 2007 to take effect in for 2008 financial statements, it called for contingencies acquired in a business combination to be measured and recognized at fair value. Preparers, auditors, and attorneys barraged FASB with complaints that measuring contingencies arising from lawsuits according to the standard would tread on attorney-client privilege and compromise outcomes.

In new guidance published last week, FASB said a contingency acquired in a business combination should be measured at fair value “if the acquisition-date value of that asset or liability can be determined during the measurement period.” FASB member Tom Linsmeier disagreed with the guidance, saying it doesn’t give any direction on how to determine if fair value can be measured and therefore is likely to lead to confusion and varied interpretation. The guidance also doesn’t tell entities how to recognize the contingency in subsequent periods, Linsmeier said.

“Under intense pressure from reporting entities, attorneys, and auditors, FASB has fully retreated from its efforts to apply fair-value measurement to contingencies,” wrote Greg Rogers, an attorney and president of Advanced Environmental Dimensions in an alert to his clients. Rogers has followed the standard closely because of its implications for measuring and reporting environmental liabilities. “As amended, FAS 141(R) represents no meaningful change from the contingency provisions in the original FAS 141.”