Provisions and contingencies: an Anglo-French investigation

Abstract

This paper summarizes the results and draft conclusions of a joint research project.' The focus is on the French concept of Provisions pour risques et charges and on the UK concept of contingencies. The work included both comparative conceptual analysis and an empirical investigation of some one hundred sets of financial statements — half from each country. From a conceptual perspective it is clear that thinking and tradition in the two countries are significantly different. The French distinctions between dettes provisionnees, provisions pour risques et charges and engagements can in no way be simplistically equated with distinc-tions in the UK between provisions, contingent liabilities and commitments. Detailed analysis of one system in terms of thinking and terminology of the other is fraught with difficulty. This has obvious implications for attempts at harmoniz-ation. Results and analysis of the empirical survey of company practice are presented and discussed.