Contingent assets

Where a council may be entitled to compensation/recovery for business losses, e.g. through an insurance policy it is considered a contingent asset and the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets should be followed.

A contingent asset should be:

• recognised – if it is virtually certain to be received
• disclosed – if receipt is probable
• ignored for financial statements purposes if receipt is less than probable.

Generally, insurance recoveries are not recognised in the financial statements until a letter confirming the payout is received from the insurance company/ other party.