Contingent liabilities and Brexit
As you are probably aware, the United Kingdom (UK) is leaving the European Union. This will have many effects on business, and in Ireland we are likely to experience the effect quite early on due to our close business ties.
Will any effects on business be revealed in the accounts of Irish (or other) businesses? The simple answer is yes, as if a company has close business ties with the UK then there is very likely to be a contingent liability or provision in the accounts. IAS 37 defines a contingent liability as:
- a possible obligation depending on whether some uncertain future event occurs, or
- a present obligation but payment is not probable or the amount cannot be measured reliably
As noted in an article in The Sunday Business Post, the outcome of Brexit is as of now uncertain, and looking at the definition of a contingent liability above, it would seem the financial statements of companies may have contingent liabilities (or even contingent assets) disclosed for some years to come. Only time will tell.
Good point about brexit and contingent liabilities. I hadn’t thought about it but makes sense. I guess there are at least potential tax liabilities if the uk leaves the common market.
I wonder how may sets of accounts will reflect this