
The International Accounting Standards Board (IASB) published a consultation on Nov. 12 to improve the requirements for recognizing and measuring provisions on company balance sheets. Provisions are liabilities of uncertain timing or amount.
"Our proposals clarify the accounting requirements for provisions, helping companies provide better information for investors," stated Andreas Barckow, IASB chair.
Investors are looking for transparent and comparable information regarding companies’ provisions for assessing future cash flows and financial positions. The IASB’s targeted improvements can help companies apply the requirements more consistently while offering investors more useful information.
The proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets will also clarify how these firms assess when to record provisions and how to measure them. The amendments would also require them to provide additional information regarding the measurement. The proposals will likely be relevant for companies with sizeable long-term asset decommissioning obligations or are subject to levies and similar government-imposed charges.
The IASB is asking for feedback on these amendments here. The comment period is open until Mar. 12, 2025.