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FRS 102: accounting for provisions and contingencies - tips and advice

In part 18 of this exclusive New UK GAAP series, Helen Lloyd FCA assesses the accounting rules on provisions and contingencies, set out in FRS 102 section 21, which closely reflect the old treatment so should not pose significant transition issues

Section 21 of FRS 102 is virtually identical to the old UK GAAP standard FRS 12 Provisions, Contingent Liabilities and Contingent Assets, and also to IAS 37, so preparers will find the language and principles very familiar.

It is worth noting that the scope of FRS 102 has been extended to include financial guarantee contracts in certain situations.

Sections 19 and 21 of FRS 102 also require certain provisions for contingent liabilities of an acquiree in a business combination to be recognised in the acquisition balance sheet.

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