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At the year end there is a present obligation as a result of a past obligating event. Because it is 'virtually 

certain' that the law will be enacted, the past contamination becomes an obligating event. It is highly 

probable that an outflow of economic resources will be required to settle this. A provision should 

therefore be made of the best estimate of the costs involved.  

 

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CHAPTER 11  

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  PROVISIONS AND CONTINGENCIES 

 

205 

 

3

   Disclosure in financial statements 

IAS 37 requires certain items for provisions and contingent assets and liabilities to be disclosed in the 

financial statements.  

3.1  Disclosures for provisions 

Disclosures required in the financial statements for provisions fall into two parts. 

(a) 

Disclosure of details of the change in carrying amount of a provision from the beginning to the end 

of the year, including additional provisions made, amounts used and other movements. 

(b) 

For each class of provision, disclosure of the background to the making of the provision and the 

uncertainties affecting its outcome, including: 

(i) 

A brief description of the nature of the provision and the expected timing of any resulting 

outflows relating to the provision   

(ii) 

An indication of the uncertainties about the amount or timing of those outflows and, where 

necessary to provide adequate information, the major assumptions made concerning future 

events 

(iii) 

The amount of any expected reimbursement relating to the provision and whether any 

asset that has been recognised for that expected reimbursement 

(IAS 37, paras. 84–85)