[Checklist] Disclosure as per AS 4: Contingencies & Events Occurring after the Balance Sheet Date

AS 4: Contingencies and Events Occurring After the Balance Sheet Date, deals with the treatment in financial statements of contingencies, and events occurring after the balance sheet date. However, contingencies due to subjects like (a) liabilities of life assurance and general insurance enterprises arising from policies issued; (b) obligations under retirement benefit plans; and (c) commitments arising from long-term lease contracts are excluded from the scope of this standard.

As per the requirement of this standard, an entity is required to follow the below-mentioned disclosure requirements:

I. If it is difficult to estimate the amount of contingent loss due to conflicting or insufficient evidence, whether the disclosure about the existence and nature of contingency has been made?

II. Where contingent liability is matched by a related counter-claim or claim against a third party, a potential loss to an enterprise may be reduced or avoided. The amount of the provision in such cases is determined after considering the probable recovery under the claim. In such case whether nature and the gross amount of the contingent liability has been disclosed?

III. If an enterprise has undertaken any discounted bills of exchange or similar obligations, has the entity disclosed the existence and amount of guarantees, and obligations arising from the same by the way of note, even though the possibility that a loss to the enterprise will occur is remote?

IV. If either of the following conditions are not met, whether the existence of a contingent loss is disclosed in the financial statements, unless the possibility of a loss is remote:

(a) it is probable that future events will confirm that, after taking into account any related probable recovery, an asset has been impaired or a liability has been incurred as of the balance sheet date, and

(b) a reasonable estimate of the amount of the resulting loss can be made.

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