Sample interview questions: How do you evaluate the accounting for provisions (IAS 37)?
Sample answer:
Evaluating Accounting for Provisions (IAS 37)
Key Considerations:
- Identify and Assess Liabilities: Determine if a present obligation exists due to a past event and whether it is reasonably estimable.
- Reasonableness of Estimate: Evaluate the adequacy and reliability of the provision estimates based on current and future events.
- Classification: Determine the appropriate classification of the provision as short-term or long-term.
- Impact on Financial Statements: Assess the impact of the provision on the income statement, balance sheet, and cash flow statement.
- Disclosure: Ensure adequate disclosure of the provision, including its nature, timing, and amount.
Specific Considerations:
Existence of a Liability:
* Review contracts, correspondence, and other documentation.
* Consult with legal counsel if necessary to determine the existence of a present obligation.
Estimation of Amount:
* Use actuarial techniques, industry benchmarks, or external data.
* Co… Read full answer