Provisions, contingent liabilities and contingent assets (IAS 37) — research project

Date recorded:


In August 2015, the Board published for comment the Request for Views: 2015 Agenda Consultation (‘the Request for Views’). The Request for Views asked for views on the relative importance and urgency of projects on the Board’s research programme.

The objective of this session was to provide the views on the IAS 37 research project. The Board was not asked to make decisions. The Board was only asked to provide feedback to the staff on the information presented in this paper.

The Board last discussed the IAS 37 research project in an Education Session at its July 2015 meeting. In that meeting the Board considered (a) possible problems with IAS 37 and (b) implications for IAS 37 of its work on the Conceptual Framework.  

In terms of the possible problems, the Board focused on two issues: (a) the existence of two different principles for identifying liabilities; and (b) unclear guidance on measurement.

In terms of the implications of its work on the Conceptual Framework ED the staff’s analysis was that (a) the proposed concepts could be the basis of clearer general guidance on identifying liabilities than is currently in IAS 37; (b) the proposed concepts could support retaining the existing recognition criteria in IAS 37; and (c) the proposed concepts could help the Board if it decided to develop more specific measurement requirements.

Staff analysis

The staff believed that the main messages from the responses to the Request for Views and online survey were that:

  1. there would be support, especially among standard-setters, for a Standards-level project that focused on incorporating into IAS 37 the concepts for identifying liabilities proposed in the Conceptual Framework Exposure Draft (if and when these concepts were finalised), and reviewing IFRIC 21;
  2. there would not be support, especially among preparers and auditors of financial statements, for a fundamental review of other aspects of IAS 37. In particular, there would not be support for changes to the recognition criteria; and
  3. many stakeholders assumed that a project to amend IAS 37 could result in changes similar to those proposed in the previous project, and this was still influencing stakeholders’ views about any possible project to amend IAS 37.

Next steps

  1. The staff would compile and document (potentially in a Discussion Paper) the evidence already gathered in the project.
  2. The document would (i) summarise the evidence obtained; (ii) give the Board’s preliminary views on whether to add a project to its Standards-level programme and the scope of that project and (iii) seek feedback from the public on those preliminary views.
  3. The Board would not publish a Discussion Paper on possible amendments to IAS 37 until it had finalised the revisions to the Conceptual Framework. Accordingly, no further Board discussions would be needed for this research project until the Board had reached decisions in its Conceptual Framework redeliberations.


The Board did not make any decision. There was general support for the staff recommendations. No significant comments or issues were raised.

Some Board members raised a concern about working with the assumption that the next step would be a Discussion Paper. Those members thought there seemed to be enough information to decide which amendments were necessary. 

The staff was asked to explain the relationship between the IAS 37 project and the Discount Rate – Research project. The staff explained that the only area in common would be non-performance risks (i.e. whether or not they should be included in the measurement of a liability).

Some Board members thought it was necessary to explore alternative measurement approaches; to which the staff responded that it was beyond the scope of the project. Another point noted was the recurring issues coming from the application of IFRIC 21. The staff responded that solving IFRIC 21 would be a long term project.

The staff also clarified that no further work would be carried out in this project in the next few months.

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