BABB INC. Insurance Brokers Since 1929

Topic: Sarbanes-Oxley

In the wake of the accounting scandals such as Enron and the passage of the Sarbanes–Oxley Act, the Security and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) have recently promulgated important and wide- reaching new standards governing the accounting and disclosure of environmental liabilities. Of these, FASB interpretation No.47, Accounting for Conditional Assets Retirement Obligations (FIN 47) is bound to have far- reaching and long –lasting impacts on corporate accounting policies and practices for practically all types of industries.

We recommend that companies act quickly to develop a policy and procedure for identification and reporting of their asset retirement obligation in a systematic way, through a four – step process (1) identification;(2)characterization;(3)measurement; and reporting. Companies that may be subject to asset retirement reporting obligations should immediately consider retaining a multi-disciplinary team of environmental consultants, and accountants. Such a team will assist the company to develop estimates. Where sufficient information for an estimate is available, the team will also be able to help the company develop and document a rationale supporting that conclusion. Where applicable, the company’s insurance program should be reviewed and consideration should be given to selling or otherwise transferring or disposing of assets that may impacted by the new standards. The corporate policies and procedures for managing assets retirement liabilities should also include a mechanism for periodic review and updating.

Babb Inc. would like to offer the services of Dr. E. Kent Mull to help guide your company through this maze.

Please fill free to contact Kent at the Wayne office-toll free-800-207-4222 or by e-mail at ekm@babbins.com