IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

IPSAS 19: Provisions, Contingent Liabilities and Contingent Assets

Objective

The objective of IPSAS 19 is to define provisions, contingent liabilities and contingent assets, identify the circumstances in which provisions should be recognized, how they should be measured and the disclosures that should be made about them. The standard also requires that certain information be disclosed about contingent liabilities and contingent assets in the notes to the financial statements to enable users to understand their nature, timing and amount.

The IFRS on which the IPSAS is based

IAS 37, Provisions, Contingent Liabilities and Contingent Assets

Content

Principal definitions

A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits or service potential.

A provision is a liability of uncertain timing or amount.

IPSAS 19.18 defines a contingent liability as:

a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or

b) A present obligation that arises from past events but is not recognized because:

i) It is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, or

ii) The amount of the obligation cannot be measured with ...