In the contingent liability section of its 1998 annual report, Dow Chemical Company reported the following:

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. The Company had accrued $364 million at December 31, 1998, for environmental matters, including $9 million for the remediation of Superfund sites. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although the ultimate cost with respect to these particular matters could range up to twice that amount. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and evolving technologies for handling site remediation and restoration. It is the opinion of the Company’s management that the possibility is remote that costs in excess of those accrued or disclosed will have a material adverse impact on the Company’s consolidated financial statements.

As a financial analyst, what questions would you raise with the firm’s CFO about the firm’s environmental disclosures?

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