Abstract:
In the last few years, more and more countries adopted laws for
environmental protection, which has important financial implications for
companies. Because of this reason, the needs of the investors, creditors,
business partners, etc. determined the organisms of accounting normalization
and the accounting organizations to deal with this matter. Therefore the
international regulation IAS 37“Provisions, Contingent Liabilities and
Contingent Assets” deals with provisions for the restoration of the
contaminated areas and the restoration of the site at the end of the works.
The regulation recommends the making of these provisions if certain
recognition criteria are met. An event that does not give rise to a present
obligation immediately may do so at a later date, because of changes in the
law or because an act (for example, a sufficiently specific public statement)
by the entity gives rise to a constructive obligation. For example, when
environmental damage is caused there may be no present obligation to
remedy the consequences. However, a present obligation arises if a new law
requires the existing damage to be rectified or if the entity publicly accepts
responsibility for rectification in a way that creates a constructive obligation.
When a new law is proposed, a present obligation under the operation of that
law arises only when the law is substantively enacted, which is when the
remaining steps in the enactment process will not change the outcome.
Differences in circumstances surrounding enactment make it impossible to
specify a single event that would make legislation substantively enacted in all
jurisdictions. In some cases, substantive enactment does not occur until the
legislation is actually enacted. We also have to have in mind that the moment
the accounting provision recognition conditions are fulfilled does not always
coincide with the time when their fiscal deductibility is admitted. In this
paper we shall approach the issues of the recognition and the deductibility of
such provisions.
