On April 20, 2010, as BP p.l.c., the third-largest listed oil producer in the world, was preparing to report strong first quarter results, an explosion occurred on its drilling rig Deepwater Horizon, killing 11 workers and injuring 16 others. Over the next two days, the rig burned and sank, resulting in a massive offshore oil spill in the Gulf of Mexico. The spill was considered "the largest environmental disaster to hit the United States" and the largest accidental marine oil spill in history. The financial reporting implications of the accident and subsequent claims, especially the recognition and measurement of provisions and related expenses, and disclosure of contingent liabilities, were a major consideration for BP and its investors.

The case discusses the current US and international accounting guidance regarding the disclosure of contingent and environmental liabilities, including FAS 5 and IAS 37. It then addresses the role of socially responsible investors and other factors that gave rise to the FASB revisiting its guidance. The case details the proposed new guidance and includes perspectives from various constituent groups (financial statement preparers and users) on its pros and cons. The case concludes with an example of existing guidance in practice using Novartis AG. It includes Novartis' financial and other quantitative disclosures regarding environmental liabilities, and its liability from a dumpsite in Bonfol, Switzerland, in particular.