The current version of IAS 37 requires the recognition of a restructuring provision at the earlier of the commencement of the restructuring and its public announcement. This requirement has led some critics to suggest that the IAS 37 approach countenances ‘big-bath’ provisioning — the very practice the standard was produced to avoid. Assess the validity of the arguments of such critics.

The exposure draft proposing changes to IAS 37 was originally issued in 2005 and then added to in 2010. Explain the clarifications that were made in the 2010 draft and outline why the 2005 draft was deficient in these areas.