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Philippine Public Sector Accounting Standard 19

PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Table of Contents
PAG
Numbe
r
BACKGROUND
INTRODUCTION TO THE IPSAS 19
PHILIPPINE APPLICATION GUIDANCE TO IPSAS 19
Scope

Effective Date

PPSAS 19 - Provisions, Contingent Liabilities and Contingent Assets


January 2014

Page 1

Philippine Public Sector Accounting Standard 19


PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Background
This Philippine Public Sector Accounting Standard (PPSAS) 19
consists of International Public Sector Accounting Standard (IPSAS)
19, Provisions, Contingent Liabilities and Contingent Assets, and
the Philippine Application Guidance (PAG) prepared to suit the
Philippine public sector situation.
The IPSAS 19 was issued in October 2002 by the International Public
Sector Accounting Standards Board (IPSASB) of the International
Federation of Accountants (IFAC). This includes amendments
resulting from IPSASs issued up to January 15, 2012.
The PAG (in italics) provides supplementary guidance on the proper
implementation of IPSAS 19.
Introduction to the IPSAS 19
IPSAS 19 defines provisions, contingent liabilities and contingent
assets, and identifies the circumstances in which provisions should
be recognized, how they should be measured, and the disclosures
that should be made about them. It also requires that certain
information be disclosed about contingent liabilities and contingent
assets in the notes to the financial statements to enable users to
understand their nature, timing and amount.
Provisions are liabilities of uncertain timing or amount. These are
distinguished from other liabilities such as payables and accruals.
Contingent liabilities are liabilities that may or may not be incurred
by an entity depending on the outcome of a future event such as a
court case. These liabilities are recorded in the books of accounts
and shown in the balance sheet when both probable and reasonably
estimable.
Contingent assets, on the other hand, are those in which
the possibility of an economic benefit depends solely upon future
events that cannot be controlled by the entity. Because of the
uncertainty of the future events, these assets are not placed on the
balance sheet. However, they are disclosed in the notes to financial
statements.

PPSAS 19 - Provisions, Contingent Liabilities and Contingent Assets


January 2014

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Philippine Application Guidance to IPSAS 19


Scope
PAG1.Paragraph 2 deals with the applicability of this Standard to all
public sector entities other than Government Business
Enterprises (GBEs).
GBE is an entity that has all the following characteristics: (a) Is
an entity with the power to contract in its own name; (b) Has
been assigned the financial and operational authority to carry
on a business; (c) Sells goods and services, in the normal
course of its business, to other entities at a profit or full cost
recovery; (d) Is not reliant on continuing government funding
to be a going concern (other than purchases of outputs at
arms length); and (e) Is controlled by a public sector entity.
This standard shall be applied to all National Government
Agencies (NGAs), Local Government Units (LGUs) and
Government-Owned and/or Controlled Corporations (GOCCs)
not considered as GBEs.
Effective Date
PAG2.This PPSAS shall apply for annual financial statements
covering periods beginning January 1, 2014.

PPSAS 19 - Provisions, Contingent Liabilities and Contingent Assets


January 2014

Page 3

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