Assets & GRAP
Contingent Liability Litigation
Pending legal claims assessed for provision, contingent liability or remote outcome.
Why litigation assessment shapes the statements
Pending legal claims against a municipality must be assessed under GRAP 19 to decide whether each is a provision to be recognised, a contingent liability to be disclosed, or a remote outcome that needs neither, and the call materially affects the reported financial position. Auditors test the completeness of claims and the reasonableness of management's assessment, often corroborated by legal representations. AuditPro Core maintains the litigation register and its provision-versus-contingent assessment so each claim's treatment is evidenced.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Open claims
48
▲ 6
Total exposure
R214 m
Provided
R62 m
Contingent only
R152 m
Legal exposure by likelihood
Material claims
| Matter | Assessment | Exposure (R m) |
|---|---|---|
| Contractor breach | Probable | 42 |
| Unfair dismissal class | Possible | 38 |
| Property damage | Possible | 24 |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Provision, contingent or remote
Where an outflow is probable and reliably estimable, a provision is recognised; where it is possible but not probable, a contingent liability is disclosed; where remote, neither is required.
Probability assessment
The classification turns on the likelihood of an outflow, informed by legal advice on the merits of each claim. The assessment must be supported, not asserted.
Completeness of claims
The greatest risk is unrecorded claims, so the register must capture every matter, drawing on legal department records and attorney confirmations to ensure completeness.
Reassessment over time
As cases progress, the probability and estimated outflow change, requiring claims to move between provision, contingent and remote categories at each reporting date.
How AuditPro Core Bridges the Gap
- Claims register: every pending matter is recorded with its assessed outcome, supporting completeness of the litigation note.
- Treatment classification: each claim is tagged as provision, contingent liability or remote with the supporting basis attached.
- Exception workflow: claims lacking a documented assessment or legal basis are flagged for review before reporting.
- Audit-ready trail: the register exports with each claim traceable to legal records and attorney confirmations.
Key Takeaways
- Probable and estimable claims are provisions; possible claims are contingent liabilities.
- Base the probability call on documented legal advice, not assertion.
- Completeness is the key risk, capture every matter from legal records.
- Reassess and reclassify claims as cases progress each reporting date.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.