TREASURER’S DIRECTIONS ACCOUNTING – LIABILITIES Section A3.3 : Provisions
TREASURER’S DIRECTIONS
ACCOUNTING – LIABILITIES
Section A3.3 : Provisions
STATEMENT OF INTENT
Complete and accurate liability information enables an
Agency to be fully aware of its financial obligations and the uncertainties expected to affect their ultimate value. This
Section explains the requirements for the recognition measurement and disclosure of provisions.
MAIN FEATURES
Section 38 of the Financial Management Act requires every Accountable Officer and every employee of an Agency to comply with the Treasurer’s Directions.
Provisions
Provisions are liabilities of uncertain timing or amount.
Recognition of Provisions
Provisions are to be recognised when: there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the amount of the provision can be reliably measured, and a separate liability is not otherwise recognised.
Measurement of Provisions
The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at reporting date.
Disclosure and Management of Provisions
For each class of provision a detailed reconciliation of the carrying amounts at the beginning and end of the period is to be disclosed in the notes to Agency financial statements.
Provisions are to be regularly reviewed and recorded amounts revised accordingly.
Reimbursements Against Provisions
Where an Agency is entitled to recover some or all of the expenditure associated with a recognised provision, the reimbursement is to be recognised as a separate asset where it is virtually certain that the reimbursement will be received if the Agency settles the associated liability.
For authoritative instruction and guidance reference should be made to related Treasurer 's
Directions and associated commentary, relevant Australian Accounting Standards and
ACCOUNTING – LIABILITIES
Section A3.3 : Provisions
STATEMENT OF INTENT
Complete and accurate liability information enables an
Agency to be fully aware of its financial obligations and the uncertainties expected to affect their ultimate value. This
Section explains the requirements for the recognition measurement and disclosure of provisions.
MAIN FEATURES
Section 38 of the Financial Management Act requires every Accountable Officer and every employee of an Agency to comply with the Treasurer’s Directions.
Provisions
Provisions are liabilities of uncertain timing or amount.
Recognition of Provisions
Provisions are to be recognised when: there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the amount of the provision can be reliably measured, and a separate liability is not otherwise recognised.
Measurement of Provisions
The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at reporting date.
Disclosure and Management of Provisions
For each class of provision a detailed reconciliation of the carrying amounts at the beginning and end of the period is to be disclosed in the notes to Agency financial statements.
Provisions are to be regularly reviewed and recorded amounts revised accordingly.
Reimbursements Against Provisions
Where an Agency is entitled to recover some or all of the expenditure associated with a recognised provision, the reimbursement is to be recognised as a separate asset where it is virtually certain that the reimbursement will be received if the Agency settles the associated liability.
For authoritative instruction and guidance reference should be made to related Treasurer 's
Directions and associated commentary, relevant Australian Accounting Standards and
References: (from 1 July 2008) Related Treasurer’s Directions: