While the sources of guidance under US GAAP and IFRS differ significantly, the general recognition criteria for provisions are similar. IAS 37, Provisions, Contingent Liabilities and Contingent Assets, provides the overall guidance for recognition and measurement criteria of provisions and contingencies. While there is no equivalent single standard under US GAAP, ASC 450, Contingencies, and a number of other standards deal with specific types of provisions and contingencies (e.g., ASC 410, Asset Retirement and Environmental Obligations; ASC 420, Exit or Disposal Cost Obligations).
In addition, although nonauthoritative, the guidance in two Concept Statements in US GAAP (CON 5, Recognition and Measurement in Financial Statements of Business Enterprises, and CON 6, Elements of Financial Statements) is similar to the specific recognition criteria provided in IAS 37. Both US GAAP and IFRS require recognition of a loss based on the probability of occurrence, although the definition of probability is different under US GAAP (in which probable is interpreted as "likely") and IFRS (in which probable is interpreted as "more likely than not").
Both US GAAP and IFRS prohibit the recognition of provisions for costs associated with future operating activities. Further, both US GAAP and IFRS require disclosures about a contingent liability whose occurrence is more than remote but does not meet the recognition criteria.
The IASB proposed amendments to IAS 37 in 2005 and then proposed amendments to IAS 37's measurement provisions in January 2010. The IASB is reviewing the project as part of its agenda consultation process in 2012.
In July 2010, the FASB proposed amendments to the disclosure requirements of ASC 450. Certain of the proposed changes are consistent with current disclosures under IAS 37 (e.g., tabular reconciliation of accrued loss contingencies), while other proposed changes may result in further differences (e.g., disclosure of certain remote loss contingencies). The FASB planned to begin redeliberations after reviewing filings for the 2010 calendar year-end reporting cycle to determine whether efforts to increase focus on compliance with existing rules have resulted in improved disclosures about loss contingences.
The FASB has not had any formal discussions about this project since November 2010.
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