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Pass Your SBR ACCA Exams with Tom Clendon

Pass Your SBR ACCA Exams with Tom Clendon

Provisions, Contingent Assets & Liabilities: Getting Started with IAS 37

Jun 5, 2026 · 21 min · 11 segments

Provisions! Seemingly a simple standard to get the easy marks, but it isn't always the low-hanging fruit we expect. In this episode, I introduce IAS 37 Provisions from the ground up. Provisions are…

Provisions! Seemingly a simple standard to get the easy marks, but it isn't always the low-hanging fruit we expect. In this episode, I introduce IAS 37 Provisions from the ground up. Provisions are very examinable, and let’s face it, they can look easy at first. But the examiner can make them tricky very quickly. I explain what a provision is, why the standard exists, and the three key recognition criteria: a present obligation from a past event, a probable outflow of economic benefits, and a reliable estimate. You will learn how to apply IAS 37 in ex...

Provisions! Seemingly a simple standard to get the easy marks, but it isn't always the low-hanging fruit we expect. In this episode, I introduce IAS 37 Provisions from the ground up. Provisions are…

Speakers: Tom ClendonHostZakiraGuest

Show signals: SuitabilitySafeBiasNot politicalAudience≈16k followers

Spotify Apple Podcasts YouTube Amazon Music Website

Top entities: Income statement×13 YouTube×2 Personal protective equipment×3 IAS 37×5 IAS 16

What Is a Provision? Definitions & Examples1:26 – 2:53

Z

ZakiraGuest

1:26

So Tom, what is a provision?

Tom ClendonHost

1:29

A provision is a liability of uncertain timing or amount.

Tom ClendonHost

1:35

And let me just unpick that provision.

Tom ClendonHost

1:38

definition, three things there.

Tom ClendonHost

1:39

It's a liability.

Tom ClendonHost

1:41

So it's an obligation.

Tom ClendonHost

1:42

We're not talking about provision for depreciation.

Tom ClendonHost

1:45

We're not talking about provision for bad debts.

Tom ClendonHost

1:48

So it's a liability, an obligation of uncertain timing.

Tom ClendonHost

1:52

We're not sure exactly when we're going to pay it.

Tom ClendonHost

1:54

So it's not like an invoice with a set due date, or maybe there's a slight uncertainty about the amount we're going to pay.

Z

ZakiraGuest

2:02

Okay.

Z

ZakiraGuest

2:02

So can you give me an example?

Tom ClendonHost

2:04

Yeah, breach of contract.

Tom ClendonHost

2:05

We're being sued.

Tom ClendonHost

2:07

So we're not quite sure when the case is going to come to court.

Tom ClendonHost

2:09

We're not quite sure how much the court is going to fine us for or all damages.

Z

ZakiraGuest

2:15

I'm feeling a little greedy today, Tom.

Z

ZakiraGuest

2:16

Can you give me another example?

Tom ClendonHost

2:19

Yeah, let's bring in sustainability, shall we? If you've built an oil rig or you've dug a quarry, you may be under an obligation to restore that land, to decommission the asset.

Tom ClendonHost

2:33

And of course, that's going to take place in the future.

Tom ClendonHost

2:36

So there'll be an element of uncertainty, perhaps as to whether it's 10 years or 11 years, there might be an element of uncertainty as to how much that cost will be in the future.

Tom ClendonHost

2:45

So there's two examples.

Z

ZakiraGuest

2:47

There are three very famous criteria, Tom, that need to be met before a provision can be recognised.

Income statementEntity
95%13 mentions
YouTubeWebsiteVideo sharing company
85%2 mentions
Personal protective equipmentEntityClothing
75%3 mentions
IAS 37Entity
65%5 mentions
IAS 16Entity
55%1 mention
The Sound of MusicMovie1965 film
45%3 mentions
Association of Chartered Certified AccountantsCompanyFinance company
35%1 mention
Call to actionEntity
25%1 mention
IFRS 2Entity
15%1 mention
Balance sheetEntity
5%1 mention

FinanceBusiness
SustainabilityBusiness > Finance > Accounting
LiabilitiesBusiness > Finance > Accounting
International StandardsBusiness > Finance > Accounting
AccountingBusiness > Finance
Financial StatementsBusiness > Finance > Accounting
ProvisionsBusiness > Finance > Accounting
Business
Recognition CriteriaBusiness > Finance > Accounting > Provisions
Contingent LiabilitiesBusiness > Finance > Accounting > Liabilities
Impact on Profit and LossBusiness > Finance > Accounting > Financial Statements
IAS 37Business > Finance > Accounting > International Standards
Decommissioning CostsBusiness > Finance > Accounting > Sustainability

What Is a Provision? Definitions & Examples1:26 – 2:53

Z

ZakiraGuest

1:26

So Tom, what is a provision?

Tom ClendonHost

1:29

A provision is a liability of uncertain timing or amount.

Tom ClendonHost

1:35

And let me just unpick that provision.

Tom ClendonHost

1:38

definition, three things there.

Tom ClendonHost

1:39

It's a liability.

Tom ClendonHost

1:41

So it's an obligation.

Tom ClendonHost

1:42

We're not talking about provision for depreciation.

Tom ClendonHost

1:45

We're not talking about provision for bad debts.

Tom ClendonHost

1:48

So it's a liability, an obligation of uncertain timing.

Tom ClendonHost

1:52

We're not sure exactly when we're going to pay it.

Tom ClendonHost

1:54

So it's not like an invoice with a set due date, or maybe there's a slight uncertainty about the amount we're going to pay.

Z

ZakiraGuest

2:02

Okay.

Z

ZakiraGuest

2:02

So can you give me an example?

Tom ClendonHost

2:04

Yeah, breach of contract.

Tom ClendonHost

2:05

We're being sued.

Tom ClendonHost

2:07

So we're not quite sure when the case is going to come to court.

Tom ClendonHost

2:09

We're not quite sure how much the court is going to fine us for or all damages.

Z

ZakiraGuest

2:15

I'm feeling a little greedy today, Tom.

Z

ZakiraGuest

2:16

Can you give me another example?

Tom ClendonHost

2:19

Yeah, let's bring in sustainability, shall we? If you've built an oil rig or you've dug a quarry, you may be under an obligation to restore that land, to decommission the asset.

Tom ClendonHost

2:33

And of course, that's going to take place in the future.

Tom ClendonHost

2:36

So there'll be an element of uncertainty, perhaps as to whether it's 10 years or 11 years, there might be an element of uncertainty as to how much that cost will be in the future.

Tom ClendonHost

2:45

So there's two examples.

Z

ZakiraGuest

2:47

There are three very famous criteria, Tom, that need to be met before a provision can be recognised.

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