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Contingent Asset

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Government Accounting Standards Advisory Board (GASAB) constituted by Comptroller and Auditor General of India (CAG) has issued Indian Government Financial Reporting Standard (IGFRS) -5 on Contingent Liabilities (other than guarantees) and Contingent Assets. This Standardprovide for disclosure requirements of contingent liabilities (other than guarantees) and contingent assets of Union and State Governments in their financial statements. The standards also define a contingent liability and asset.
As per IGFRS 5, Contingent asset is ‘a possible asset that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the control of the entity’. Thus it is a potential future asset for the Government and not a present asset. It arises from some past events and its existence will be confirmed only by the occurrence of some future events. Its time of payment, or the quantum of payment, or both, are uncertain.
eg. tax arrears, which are under litigation, may or may not flow to government depending upon the final verdict by Courts. Similarly, ownership of land acquired, but under litigation, may or may not come to government.


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