IASB proposes to tweak requirements for provisions

The International Accounting Standards Board is looking for feedback on some targeted improvements it's proposing to make to improve the requirements for recognizing and measuring provisions on corporate balance sheets. 

These provisions are usually liabilities of an uncertain timing or amount, so investors would like to see more transparent and comparable information about companies' provisions for assessing future cash flows and financial positions. The IASB's targeted improvements aim to help companies apply the requirements more consistently and give investors more useful information.

The proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, would clarify how companies assess when to record provisions and how to measure them. The amendments would also require companies to offer more information about the measurement. They would probably be mostly relevant for companies that have large long-term asset decommissioning obligations or are subject to levies and similar government-imposed charges.

"Our proposals clarify the accounting requirements for provisions, helping companies provide better information for investors," said IASB chair Andreas Barckow in a statement Tuesday. 

The IASB is presenting the proposals in three documents:

• Exposure Draft Provisions—Targeted Improvements—Proposed amendments to IAS 37
• Exposure Draft Provisions—Targeted Improvements—Proposed amendments to Guidance on implementing IAS 37
• Exposure Draft Provisions—Targeted Improvements—Basis for Conclusions

The IASB is asking for feedback on the proposed amendments by March 12, 2025.