Accounting for Government and Not for Profit Organizations

Please answer this question. Thank you!

You work as an accountant at a large "not-for-profit- business oriented" hospital.You report directly to the Chief Accounting Officer.The hospital's Chief Compliance Officer just informed the accounting team that a surgeon left behind an instrument in a patient's body in the course of asurgery.The hospital's legal counsel informed the accounting team that the hospital is certain to be sued.The Hospital's Board of Directors is very concerned on how this event might affect the hospital's financial statements.The Chief Accounting Officer has requested that you write

brief and concise memo that will be presented to the board on how this incident could affect the financials.

You recall from your student days that contingencies are discussed in Statement of Financial Accounting Standards # 5.See linkhttp://www.fasb.org/pdf/fas5.pdf