Goldman Sachs 2012 Annual Report Download - page 45

Management’s Discussion and Analysis
Use of Estimates
The use of generally accepted accounting principles requires
management to make certain estimates and assumptions. In
addition to the estimates we make in connection with fair
value measurements, and the accounting for goodwill and
identifiable intangible assets, the use of estimates and
assumptions is also important in determining provisions for
losses that may arise from litigation, regulatory proceedings
and tax audits.
We estimate and provide for potential losses that may arise
out of litigation and regulatory proceedings to the extent
that such losses are probable and can be reasonably
estimated. In accounting for income taxes, we estimate and
provide for potential liabilities that may arise out of tax
audits to the extent that uncertain tax positions fail to meet
the recognition standard under FASB Accounting Standards
Codification 740. See Note 24 to the consolidated financial
statements for further information about accounting for
income taxes.
Significant judgment is required in making these estimates
and our final liabilities may ultimately be materially
different. Our total estimated liability in respect of
litigation and regulatory proceedings is determined on a
case-by-case basis and represents an estimate of probable
losses after considering, among other factors, the progress
of each case or proceeding, our experience and the
experience of others in similar cases or proceedings, and
the opinions and views of legal counsel. See Notes 18 and
27 to the consolidated financial statements for
information on certain judicial, regulatory and
legal proceedings.
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