IAS 37. Contingncies and their impairment

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Dear Members

I have one below query (related to Banks) and appreciate to have your views:

"We had some contingeny in our books (Shown under contingeny and commitments)and corrsponding provision against it in other liabilities (provision against off balance sheet obligations). Auditors were of the view that if you have recorded the liability by creating the provision then there isn't any contingency and therefore it need to be reversed. I believe this is impairment in contingeny and as like advances we have to show the both contingency and its provision/impairment in other liabilities"

Need your views, whether or not contingency need to be reversed.
 

kirby

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Auditors have a point. If you ONLY noted that you had a contingency (let's say you were being sued) and did not feel it was PROBABLE of occuring then just listing it is all you can do. BUT when you guys went ahead and recorded a provision for it to do so you must have felt it was PROBABLE of occurring and you gave it a number so you showed you could ESTIMATE it. So - yeah - booking the provision is duplicative of the contingency notation.
 

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