Provision for commission to agents on outstanding premiums
Can any one clarify whether it is necessary for provision for
commission to agents to be made for the premiums not yet received, at
the end of every month.
For any provision, I think you’d first need to look at IAS 37 paragraph 14.
Is there a present obligation as a result of a past event?
Is it probable that there will be an outflow of resources to settle
Can the amount be reasonably estimated?
Whether or not the premiums have been received is not relevant.
If you recognise an income in the Profit & Loss statement you have
always to make provisions for related expenses if :
it is probable that any future economic benefit associated with the
item will flow to or from the entity and the item has a cost or value
that can be measured with reliabilityJeppe