Investors will be up against auditors, companies and lawyers in the US as the standard considers opinions on changes to accounting disclosure rules.

The Financial Accounting Standards board's current draft of a paper on changes disclosure rules require companies to reveal threats that seem remotely probable if the issue is to be dealt with within a year.

Investors with social responsibility on their agenda believe the rules are too lax and support the Financial Accounting Standards Board's draft which suggests that companies disclose and quantify all potential environmental and legal risks. Investors however are also of the view that more should be done to reveal potential risks associated with environmental or social-justice violations.

Activist investors in particular argue that as long-term investors, they are concerned with threats that may appear remote, until they become realities which cannot be contained – like the Enron accounting scandal and the subprime crisis.

But companies, audit firms and lawyers believe that while the existing rules could be improved, broad disclosures could lead companies to overstate contingent liabilities.

FASB will decide which route to take after reviewing 23 comments sent in by the profession and companies, as well as social responsibility group such as the Social Investment Forum the Investor Environmental Health Network (IEHN), the Dominican Sisters of Hope, and Trillium Asset Management – all of whom support improved disclosures.

'All too often we have seen that these momentous issues were looming for many years and eventually resulted in catastrophic consequences for investors,' Trillium's executive vice president, Cheryl Smith wrote in her comment letter.

'The [FASB] proposal may allow corporate lawyers to routinely block disclosure of almost any information that they designate as [potentially damaging to the company], or prejudicial. When investors are unaware of impending financial pain at companies in which they hold stock, they often face expensive surprises,' IEHN attorney Sanford Lewis told a press conference.

But companies oppose these views.

CFO of U.S. Steel Corp. Gretchen Haggerty argued in her comment letter that the level of detail about contingencies would be 'unduly burdensome', 'subjective and difficult to estimate with any precision'.

Companies also believe that information disclosed could be used against companies at a later stage or in pending lawsuits against them.

Further reading:

Read FASB's exposure draft here