IASB proposes targeted improvements to requirements for provisions

November 12, 2024

The International Accounting Standards Board (IASB) has today published a consultation aimed at improving the requirements for recognising and measuring provisions on company balance sheets. Provisions are liabilities of uncertain timing or amount.

Investors seek transparent and comparable information about companies’ provisions for assessing future cash flows and financial positions. The IASB’s targeted improvements would help companies apply the requirements more consistently and provide investors with more useful information.

The proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets would clarify how companies assess when to record provisions and how to measure them. The amendments would also require companies to provide more information about the measurement. The proposals would most likely be relevant for companies that have large long-term asset decommissioning obligations or are subject to levies and similar government-imposed charges.

Andreas Barckow, Chair of the IASB, said: Our proposals clarify the accounting requirements for provisions, helping companies provide better information for investors.

The IASB is inviting feedback on these amendments. The comment period is open until 12 March 2025.

[ifrs.org]