40.1 Accounting policy

Reference Areas:
Best Pratices in PZU

A provision is a liability of uncertain timing or amount. A provision is recognized on the basis of a current obligation arising from past events, the settlement of which will result in an outflow of resources embodying economic benefits. A provision amount is determined based on a reliable estimation of this outflow at the balance sheet date.

Provisions for guarantees and sureties are determined as a difference between the expected value of a balance sheet exposure arising from an off-balance sheet liability and the present value of expected future cash flows obtained from the balance sheet exposure resulting from the liability granted.

A provision for restructuring costs is recognized only if the general provisioning criteria are met and additionally the detailed criteria relating to restructuring cost provisions are satisfied, such as having a detailed formal restructuring plan and raising valid expectation in those affected that the restructuring will be carried out (by starting to implement the plan or announcing its main features).

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