Extracts from relevant Accounting Standards for Private Enterprises (ASPE)
Section 3290, Contingencies, paragraphs 3290.05-.06, 3290.12, and 3290.18-.19
Section 3290 defines a “contingency” as an existing condition or situation involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. This Section requires an entity to consider the likelihood of a contingent liability in determining the appropriate accounting treatment and disclosure. The amount of a contingent loss shall be accrued in the financial statements by a charge to income when both of the following conditions are met: it is likely that a future event will confirm that an asset had been impaired or a liability incurred at the date of the financial statements; and the amount of the loss can be reasonably estimated.
Climate-related matters may affect the recognition, measurement, and disclosure of contingent liabilities in the entity’s financial statements. For example, regulatory requirements to remediate environmental damage or levies imposed by governments for failure to meet climate-related targets such as net-zero emissions by 2030.
