What are ‘General Provisions’
General provisions are balance sheet items representing funds set aside by a company as assets to pay for anticipated future losses. For banks, a general provision is considered to be supplementary capital under the first Basel Accord. General provisions on the balance sheets of financial firms are considered to be a higher risk asset, because it is assumed that the underlying funds will be in default in the future.
Explaining ‘General Provisions’
Account names for general provisions either vary with the type of account or may be listed as a consolidated figure in parentheses next to accounts receivable (AR).
General Provisions for Companies
A company that records transactions and works with customers through AR may show a general provision on the balance sheet for bad debts or for doubtful accounts. The amount is uncertain, since the default has not yet occurred, but is estimated with reasonable accuracy based on company history. For example, the company may analyze write-offs from the prior accounting year when establishing general provisions for doubtful accounts in the current year. When a write-off is used for clearing a specific account, the amount is transferred to bad debt expenses.
General Provisions for Financial Institutions
Because of international standards, banks and other lending institutions are required to carry enough capital to offset risks. The standard may be met by indicating on the balance sheet either an allowance for bad debts or a general provision. The reserve funds provide backup capital for risky loans that may default.
Specific Provisions
A specific provision is created for receivables facing serious financial problems or for a trade dispute with the entity. The balances may be noted by examining an aged receivable analysis detailing the time elapsed since creating the document. Long-outstanding balances may be included in the specific provision for doubtful debts. However, a specific provision may not be created for the entire amount of the doubtful receivable. For example, if there is a 50% chance of recovering a doubtful debt for a certain receivable, a specific provision of 50% may be required.
Changes in Financial Reporting Standards
The act of creating general provisions has been declining since revisions in International Financial Reporting Standards (IFRS). International Accounting Standards (IAS) 39 prohibits creating general provisions based on past experience, due to the subjectivity involved in creating the estimates. The reporting entity is required to carry out impairment review for determining the recoverability of the receivables and any associated provisions.
What is the purpose of General Provisions
General Provisions are a set of rules that apply to all federal agencies. They are intended to promote efficiency and fairness in the federal government. The specific provisions vary depending on the agency, but they typically include regulations on hiring, contracting, and financial disclosure. In addition, the General Provisions also establish procedures for investigating potential ethical violations by government employees. By increasing transparency and accountability, the General Provisions help to ensure that the federal government operates in a fair and efficient manner.
How can you benefit from General Provisions
General Provisions is a versatile tool that can be used in a number of ways to benefit your business. For example, it can be used to purchase necessary supplies and equipment, to hire new employees, or to expand your operations. Additionally, General Provisions can also be used to cover the cost of advertising and marketing, or to offset the cost of unexpected repairs or improvements. Ultimately, General Provisions is a flexible way to help you meet your short-term business goals. When used correctly, it can help you grow your business and achieve long-term success.
What are the key points of General Provisions
The General Provisions are a set of regulations that apply to all Federal Highway Administration (FHWA) funded contracts. They establish the roles and responsibilities of the contracting parties, as well as the procedures that will be followed during the course of the project. The key points of the General Provisions are as follows:
-The Contracting Officer is responsible for administering the contract on behalf of the FHWA.
-The Contractor is responsible for performing the work specified in the contract.
-The FHWA will provide progress reports to Congress on the status of the project.
-The Contractor is required to submit reports on the progress of the work.
– The FHWA may terminate the contract if the Contractor fails to perform its obligations under the contract.
