Accounting for Provisions in Accordance with International Financial Reporting Standards

Abstract

Accounting for provisions in accordance with International Financial Reporting Standards (IFRS), particularly IAS 37, ensures the prudent recognition of present obligations resulting from past events. Recognition is conditioned by the probability of future outflows of resources and the ability to reliably estimate the obligation's value. IFRS requires regular reassessment and, where applicable, discounting to present value, offering greater precision and transparency compared to national accounting standards. Differences between IFRS and the Moldovan SNC highlight the impact of regulatory frameworks on the quality of financial reporting. Provisions play a vital role in risk management and financial stability, contributing to fair presentation and the comparability of financial statements in an international context. The distinction between provisions, contingent liabilities, and contingent assets is essential for ensuring a balanced presentation of financial obligations. Accurate estimation methods, based on historical data and professional judgment, support the credibility of financial information. The adoption of IFRS enhances the comparability of financial statements across jurisdictions and strengthens investor confidence. Proper application of IAS 37 helps entities manage uncertainty and meet international expectations of transparency and accountability in financial reporting. CZU: 657.41/.45:006.44(100); JEL: M41