ED 336 Provisions—Targeted Improvements issued for comment

Tuesday, November 19, 2024

The International Accounting Standards Board (IASB) has proposed amendments aimed at improving the requirements for recognising and measuring provisions on balance sheets. Provisions are liabilities of uncertain timing or amount. To support IFRS compliance, the AASB proposes the same amendments through ED 336 Provisions—Targeted Improvements.

The proposed amendments would clarify how entities assess when to record provisions and how to measure them, such as using a risk-free rate to discount the future expenditure required to settle an obligation. The amendments would update the definition of a liability in the Standard and the wording of the recognition criteria to align them with the Conceptual Framework for Financial Reporting.

The amendments would result in the superseding of Interpretation 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment and Interpretation 21 Levies.

The amendments would also require entities to provide more information about the risk-free rate(s) used to discount the expenditure, which would most likely be relevant to entities that have large long-term asset decommissioning or environmental rehabilitation obligations. Comments to the AASB are requested by 31 January 2025. The IASB’s comment period closes on 12 March 2025.