From: Financial Manager To: Gunther Krebs - Production Director Subject: Problems with moulding machine Hi Gunther, Thanks for your email. I'll answer each of your queries in turn. Claims by customers and claims against suppliers of new material It a customer makes a claim against Prybloxx relating to supply of a defective produc must establish whether the product is defective and, if so, what the cause was. if the product is defective (irrespective of the cause), Prybloxx must make amen financial reporting terms, this issue is covered by IAS 37 Provisions, Contingent Liabilitie Contingent Assets (IAS 37). IAS 37 requires that a provision is recognised in the fin statements if the following three criteria have been complied with