DISCLOSURES

Disclosures for Provisions

Disclosures mandated by the standard for provisions are the following:
•
For each class of provision, the carrying amount at the beginning and the end of
the period, additional provisions made during the period, amounts used during the
period, unused amounts reversed during the period and the increase during the period
in the discounted amount arising from the passage of time and the effect of change in
discount rate (comparative information is not required).
For each class of provision, a brief description of the nature of the obligation and
the expected timing of any resulting outows of economic benets, an indication of
the uncertainties regarding the amount or timing of those outows (including, where
necessary in order to provide adequate information, disclosure of major assumptions
made concerning future events), and the amount of any expected reimbursement,
stating the amount of the asset that has been recognised for that expected
reimbursement.
In extremely rare circumstances, if the above disclosures as envisaged by the standard
are expected to seriously prejudice the position of the reporting entity in a dispute with
third parties on the subject matter of the provision, then the standard takes a lenient
view and allows the reporting entity to disclose the general nature of the dispute
together with the fact that, and reason why, the information has not been disclosed.
This is to satisfy the concerns of those who believe that mere disclosure of certain
provisions will encourage potential claimants to assert themselves, thus becoming a
“self-fullling prophecy.”
For the purposes of making the above disclosures, it may be essential to group or
aggregate provisions. The standard also offers guidance on how to determine which
provisions may be aggregated to form a class. As per the standard, in determining which
provisions may be aggregated to report as a class, the nature of the items should be sufciently
similar for them to be aggregated together and reported as a class. For example, while it may
be appropriate to aggregate into a single class all provisions relating to warranties of different
products, it may not be appropriate to group and present, as a single class, amounts relating
to normal warranties and amounts that are subject to legal proceedings.

Disclosures Prescribed by IAS 37 for Contingent Liabilities and Contingent Assets

An entity should disclose, for each class of contingent liability at the end of the reporting
period, a brief description of the nature of the contingent liability and, where practicable, an
estimate of its nancial effect measured in the same manner as provisions, an indication of the
uncertainties relating to the amount or timing of any outow and the possibility of any
reimbursement.
In aggregating contingent liabilities to form a class, it is essential to consider whether the
items are sufciently similar in nature such that they could be presented as a single class.
In the case of contingent assets where an inow of economic benets is probable, an
entity should disclose a brief description of the nature of the contingent assets at the end of the
reporting period and, where practicable, an estimate of their nancial effect, measured using
the same principles as provisions.
Where any of the above information is not disclosed because it is not practical to do so,
that fact should be disclosed. In extremely rare circumstances, if the above disclosures as
envisaged by the standard are expected to seriously prejudice the position of the entity in a
dispute with third parties on the subject matter of the contingencies, then the standard takes a
lenient view and allows the entity to disclose the general nature of the dispute, together with
the fact that, and reason why, the information has not been disclosed.
Disclosure of Events after the End of the Reporting Period
Date of authorisation for issue
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18 It is important for users to know when the financial statements were authorised
for issue, because the financial statements do not reflect events after this date.
Updating disclosure about conditions at the end of the
reporting period
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
20 In some cases, an entity needs to update the disclosures in its financial
statements to reflect information received after the reporting period, even when
the information does not affect the amounts that it recognises in its financial
statements. One example of the need to update disclosures is when evidence
becomes available after the reporting period about a contingent liability that
existed at the end of the reporting period. In addition to considering whether it
IFRS Foundation A851
IAS 10
IAS 10
should recognise or change a provision under IAS 37, an entity updates its
disclosures about the contingent liability in the light of that evidence.
Non-adjusting events after the reporting period
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
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22 The following are examples of non-adjusting events after the reporting period
that would generally result in disclosure:
(a) a major business combination after the reporting period (IFRS 3
Business
Combinations
requires specific disclosures in such cases) or disposing of a
major subsidiary;
(b) announcing a plan to discontinue an operation;
(c) major purchases of assets, classification of assets as held for sale in
accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued
Operations
, other disposals of assets, or expropriation of major assets by
government;
(d) the destruction of a major production plant by a fire after the reporting
period;
(e) announcing, or commencing the implementation of, a major
restructuring (see IAS 37);
(f) major ordinary share transactions and potential ordinary share
transactions after the reporting period (IAS 33
Earnings per Share requires
an entity to disclose a description of such transactions, other than when
such transactions involve capitalisation or bonus issues, share splits or
reverse share splits all of which are required to be adjusted under
IAS 33);
(g) abnormally large changes after the reporting period in asset prices or
foreign exchange rates;
(h) changes in tax rates or tax laws enacted or announced after the
reporting period that have a significant effect on current and deferred
tax assets and liabilities (see IAS 12
Income Taxes);
(i) entering into significant commitments or contingent liabilities, for
example, by issuing significant guarantees; and
(j) commencing major litigation arising solely out of events that occurred
after the reporting period.