You work as an accountant at a large not-for-profit- business oriented hospital. You report directly to the Chief Accounting Officer. The hospitals Chief Compliance Officer just informed the accounting team that a surgeon left behind an instrument in a patients body in the course of asurgery. The hospitals legal counsel informed the accounting team that the hospital is certain to be sued. The Hospitals Board of Directors is very concerned on how this event might affect the hospitals financial statements. The Chief Accounting Officer has requested that you write a brief and concise memo (around 250 words) 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