Contingencies ASPE 3290 IAS 37

Question 1

Under what circumstances should liabilities that are
contingent on future events be accrued/disclosed?

Answer 1

ASPE 3290

• Should be accrued if loss is likely (chance of
  occurrence is high) and can be estimated
• Should be disclosed if loss is likely but can’t be
  estimated or if the likelihood is not determinable

IAS 37

• Should be accrued if probable (more likely than not) and can be reliably measured (IAS 37 says
  that only in very rare circumstances would it not be
  possible to measure)
• Liabilities not meeting the above
  conditions are disclosed
• Note: Term “contingent liability” under IFRS refers to liabilities that are not recognized due to not meeting the probability threshold or not being
  measurable. This is different than ASPE where it refers to “any liability whose resolution is dependent on a future event”

Question 2

How are contingent gains treated?

Answer 2

ASPE 3290

• Can’t recognize contingent gains
• Disclose required only if gain is likely but may also
  disclose where likelihood of gain is not determinable
• Change in contingent liability (timing or amount)
  is treated as a change in estimate

IAS 37

• Can’t recognize contingent gains
• Disclose only if gain probable (note that
  “likely” under ASPE is a higher threshold than
  “probable” under IFRS)