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IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 37 Provisions, Contingent Liabilities and Contingent Assets sets the recognition criteria and measurement bases to be applied to provisions, contingent liabilities and contingent assets.

Published September 1998. Effective 1 July 1999.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Synopsis

IAS 37 requires that a provision is only recognised where:

  • There is a legal or constructive present obligation as a result of a past event, and
  • Payment is probable, and
  • The amount can be reliably estimated.

The amount of the provision should be the best estimate of the amount required to settle the obligation at the reporting date.

Contingent liabilities are not recognised, but are disclosed unless the possibility of an outflow of economic resources is remote.

Contingent assets are not recognised, but are disclosed where an inflow of economic benefits is probable.

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Which version of the standard?

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Please be aware that as part of the changes to ICAEW faculty membership, this service will be withdrawn after 31 December 2022.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

Current proposals

  1. The Board is developing proposals for targeted improvements to IAS 37 in order to:
  • align the definition of a liability and requirements for identifying liabilities with the Conceptual Framework, and
  • clarify which costs to include in the measurement of provision, and
  • specify whether the rate at which an entity discounts a provision should reflect the entity's own credit risk.

The following interpretations refer to IAS 37

UK reduced disclosures – FRS 101

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard for FRS 101 preparers

IAS 37 allows the non-disclosure of information about provisions and contingent liabilities where disclosure is expected to prejudice the position of an entity in a dispute. In these cases IAS 37 requires that the general nature of the dispute is disclosed. UK companies applying FRS 101 are required to provide additional specific numeric and narrative disclosures.

Disclosure exemptions for FRS 101 preparers

There are no disclosure exemptions from IAS 37.

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This page was last updated 30 August 2022.