Where a council may be entitled to compensation/recovery for business losses, e.g. through an insurance policy it is considered a contingent asset and the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets should be followed.
A contingent asset should be:
- recognised – if it is virtually certain to be received
- disclosed – if receipt is probable
- ignored for financial statements purposes if receipt is less than probable.
Generally, insurance recoveries are not recognised in the financial statements until a letter confirming the payout is received from the insurance company/ other party.
Last updated: Monday, Nov 30, 2020