(a) Provisions are particular kinds of liabilities. It therefore follows that provisions should be recognized when the definition of a liability has been met. The key requirement of a liability is a present obligation and thus this requirement is critical also in the context of the recognition of a provision. IAS 37 Provisions, Contingent Liabilities and Contingent Assets deals with this area. Required: (i) Explain why there was a need for detailed guidance on accounting for provisions. (ii) Explain the circumstances under which a provision should be recognised in the financial statements according to IAS 37 Provisions, Contingent Liabilities and Contingent Assets