Provision movement reconciliation
A provision movement reconciliation explains changes between opening and closing provision balances. It distinguishes new or increased provisions, amounts used to settle the obligation and unused amounts reversed. This helps users understand both the period’s estimate changes and cash settlements. Payments against an existing provision reduce the liability rather than creating the same expense for a second time.
Worked example
Opening provision $5,000 plus new expense $2,000 less $3,000 used to settle claims and $500 reversed gives closing provision $3,500.
Common mistake
A payment against a provision is not automatically a new expense. Separate usage from changes in estimates and do not confuse provisions with equity reserves.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | K1 | Supporting | July 2027–August 2028 |
Related terms
Also called: Provision roll-forward