Provisions – Targeted Improvements

We are seeking feedback on a proposal from the International Accounting Standards Board to improve the requirements around accounting for provisions.

These proposed amendments look to update the definitions and recognition criterion around provisions and provide clarifications on existing requirements to help entities improve their complex judgement-making in this area.

Proposed improvements in the accounting for provisions

The IASB has developed proposals to clarify requirements within IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

Investors seek transparent and comparable information about companies’ provisions for assessing future cash flows and financial positions. The IASB’s targeted improvements would help companies apply the requirements more consistently and provide investors with more useful information.

The targeted improvements primarily include:

  • Updates to the definition of a liability;
  • Clarifications and disentanglement of supporting requirements, including ‘present obligation’ and ‘past event’ recognition criterion;
  • Explanations around when an entity should recognise provisions for obligations it could avoid through it's future actions;
  • New requirements for recognising provisions around threshold-triggered costs;
  • Clarification around whether discount rates reflect non-performance risk; and
  • Guidance on which costs to include in the measurement of a provision.
Read the IASB Exposure Draft and the Accompanying Basis for Conclusions. 
 
Read the IASB Proposed Amendments to Guidance on implementing IAS 37.
 
Additional information can be found on the IFRS project page.

 

Providing feedback  

We are keen to get your perspective on the proposed requirements to inform our submission to the IASB. Specifically, we would like to understand how the updated definitions and recognition criterion would impact on your provisioning processes in New Zealand, and whether they help improve the complex judgement-making required in this area,

We are also interested in understanding what the initial and ongoing cost implications might be on your business, such as system or process changes and staff training.

We appreciate both formal and informal comments, whether supportive or critical, as both supportive and critical comments are essential for us to reach a balanced view. We will put all written submissions on our website unless requested otherwise, and we reserve the right not to publish defamatory submissions.

Your feedback will inform our submission to the IASB, and our next steps.

How to provide feedback

There are a number of ways you can provide your view:

  • Fill in the form below
  • Email the team at accounting@xrb.govt.nz
  • You can also send your comments directly to the IASB (by Wednesday 12 March 2025), sending a copy of your submission to the XRB would be appreciated. 

XRB Submissions close Monday 3 February 2025

We intend on publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 2020 also applies.

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