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1.Adjustment of Asset and liabilities event occurring after the balance sheet date.The contingent liabilities may occurs that the financial statement approved and effect the financial effects . give an example.2.Adjustment of Asset and liabilities event occurring after the balance sheet date approved the financial statement .The contingency may not occurs (not sure) the fact should be disclosed give an example.
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Contingent liabilities
Where the Group undertakes to make a payment on behalf of its customers for guarantees issued such as for performance bonds or as irrevocable letters of credit as part of the Group’s transaction banking business for which an obligation to make a payment has not arisen at the reporting date, those are included in these financial statements as contingent liabilities.Other contingent liabilities primarily include revocable letters of credit and bonds issued on behalf of customers to customs officials, for bids or offers and as shipping guarantees.The Group receives legal claims against it in a number of jurisdictions arising in the normal course of business. The Group considers none of these matters as material either individually or in aggregate. Where appropriate the Group recognises a provision for liabilities when it is probable that an outflow of economic resources embodying economic benefits will be required and for which a reliable estimate can be made of the obligation .The Group seeks to comply with all applicable laws and regulations but may be subject to regulatory actions and interventions across our markets, the outcome of which are generally difficult to predict and can be material to the Group.
Commitments
Where the Group has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans, overdrafts, future guarantees whether cancellable or not or letters of credit and the Group has not made payments at the balance sheet date, those instruments are included in these financial statements as commitments
Example
Contingent liabilities and commitments
The table below shows the contract or underlying principal amounts and risk weighted amounts of unmatured off-balance sheet transactions at the balance sheet date. The contract or underlying principal amounts indicate the volume of business outstanding and do not represent amounts at risk. XLS 2012$million2011$million1Includes amounts relating to the Group’s share of its joint venturesContingent liabilities1 Guarantees and irrevocable letters of credit34,28127,022Other contingent liabilities10,16815,858 44,44942,880Commitments1 Documentary credits and short-term trade-related transactions7,7528,612Forward asset purchases and forward deposits placed711733Undrawn formal standby facilities, credit lines and other commitments to lend: One year and over39,30928,507Less than one year17,38824,193Unconditionally cancellable110,13888,652 175,298150,697
Dear Dasarathi
According to IAS37 A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
An entity should not recognise a contingent liability. An entity should disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.
Commitment:
Commitment is not defined in IAS/IFRS. Whenn not defined then ordinary dictionary meaing of a term is used. Commitment in accounting actualy means: an engagement to assume a financial obligation at a future date
A potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and this uncertainty will be resolved by a future event
I With Answer mr khalid noor
A potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and this uncertainty will be resolved by a future event. A contingent liability is recorded in the books of accounts only if the contingency is probable and the amount of the liability can be estimated.
Commitment s are an intrinsic part of the expenditure planning and the budgetary control processes. It is essential that Commitment controls are in place to: ensure compliance to Sections32 and 46 of the Financial Administration Act (FAA) , which confirms the availability of funds before a contractual arrangement is entered into; record the Commitment s or obligations into the System for Accountability and Management (SAM).
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