Provisions for litigation, warranties, restructuring and environmental obligations are typical examples. Obligations that do not meet the criteria are not recognised but disclosed in the notes as contingent liabilities.
Because provision amounts involve significant management estimates, lawyers' confirmations and subsequent events are examined in the audit.
Source: TAS 37
Related terms
Contingent liabilityA possible obligation whose existence will be confirmed by uncertain future events, or a present obligation where an outflow of resources is not probable.Events after the reporting periodEvents occurring between the end of the reporting period and the date the financial statements are authorised for issue.External confirmationThe auditor obtaining written confirmation of a balance or information directly from a third party (bank, customer, supplier, lawyer).Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Amortised costThe amount at which a financial asset or liability is measured at initial recognition, minus principal repayments, plus cumulative amortisation calculated using the effective interest method.AssociateAn entity over which the investor has significant influence but not control or joint control.
Last updated: October 22, 2026 · This definition is for general information only.