Considerations Regarding the Implications of the Provisions Reporting in the Context of Current Accounting Regulations
Author:
Lecturer Roxana Manuela DICU, Ph. D.; Associate prof. Daniela-Neonila MARDIROS, Ph. D.
JEL:
M40, M41, O16
DOI:
Keywords:
provisions, prudence, integrated reporting, risks, estimation
Abstract:
The bad news is reflected in results faster than the good news. However, accounting has found a way to “anticipate” the risks and the potential losses, related to future exercises, providing there is an obligation on the balance sheet date and the possibility of estimating value. These are the provisions, accounting conventions which, in fact, are seeking to avoid distribution of the entity’s profit amounts to shareholders, because it affects costs. Also, the need of knowing the losses has imposed, for the entity, the presentation in the notes of information on potential liabilities, as part of the qualitative dimension of the financial statements. This paper intends to present some views on the implications of recognition of provisions and contingent liabilities, accompanied by a quantitative analysis of provisions reported by entities in the mining industry, recognized as a complex and risky domain.\r\n