What is IAS 37: Provisions, Contingent Liabilities, and Contingent Assets?
IAS 37 is the international accounting standard that governs how companies recognize, measure, and disclose provisions, contingent liabilities, and contingent assets.
How It Works
- Recognize a provision if there is a present obligation, probable outflow, and reliable estimate.
- Disclose contingent liabilities if not recognized.
- Disclose contingent assets only when virtually certain.
Saudi Context
SOCPA adopts IAS 37 for IFRS-reporting Saudi entities. Provisions for legal claims, employee end-of-service benefits, and product warranties are common in Saudi audits.
Example
A Saudi company facing a likely SAR 5 million lawsuit settlement recognizes a provision of SAR 5 million on the balance sheet and discloses the case in the notes.