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.
Contents
Free to view
- Synopsis (including link to unaccompanied version of IAS 37)
- Related IFRICs
- Current proposal
- UK reduced disclosures*
- Current proposals
Financial Reporting Faculty members only
*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.
The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.
This unaccompanied version does not include additional content that accompanies the full standard, such as illustrative examples, implementation guidance and bases for conclusions.
Which version of the standard?
'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.
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.
*Not UK endorsed as at 4 February 2022. Read more on UK endorsement of IFRS standards. Endorsed for use in the EU as at 4 February 2022. Read more on EU endorsement of IFRS standards.
Current proposals
- 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
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IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities
Addresses accounting for a change in the carrying amount of a provision that is included in the carrying amount of an item of PPE.
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IFRIC 5 provides guidance on how a contributor to a decommissioning fund should account for its interest in a fund, including its right to receive reimbursement from such a fund.
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IFRIC 6 clarifies when producers of electrical goods must recognise a liability under IAS 37 for the cost of managing waste electrical and electronic equipment.
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IFRIC 12 Service Concession Arrangements
Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.
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Provides guidance on when to recognise a liability for a levy imposed by a government.
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Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.
UK reduced disclosures
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
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
There are no disclosure exemptions from IAS 37.
Other resources
Factsheets
- 2020 IFRS Accounts and 2021 IFRS Accounts provide more information on amendment 4
- FRC Thematic Review: IAS 37 Provisions, Contingent Liabilities and Contingent Assets (October 2021)
This page was last updated 4 February 2022.