Abstract:

Balance provisions are an accounting category that is exposed to a high-level risk of material misstatement. This is because it is related to the estimation of future liabilities as to the probability of their occurrence as well as a reliable estimation of the value of the future liability. Provisions are subject to disclosure in the period in which the economic event that will give rise to a future obligation to lose economic benefits occurs. Changes in the value of the estimated amount of a provision are always a current period event, and their effects are not disclosed in previous fiscal years. However, does this mean that provisions cannot be disclosed on a capital basis? Can no errors be made in relation to the provisions? This article analyses a case study of an audit of an entity's financial statements in which this issue was analyzed.