Unfortunately disputes may arise between an entity and a third party, employee, manager, director and these disputes may result in legal action being entered into between the parties. The issue giving rise to the provision (or contingent liability) might not have reached the legal stage, but making disclosures as required in IAS 37 sub 92 (see below) on the subject matter of the dispute might seriously prejudice the position of the reporting entity involved in the dispute. Disclosure when information is seriously prejudicial
As said in IAS 37 sub 92, these instances are expected to be quite rare, but when they do arise, IFRS does not require a comprehensive disclosure required by the accounting standards to be made. Instead limited disclosures are included in the financial statements. Disclosure when information is seriously prejudicial
In terms of prejudicial disclosures, IFRS does acknowledge that the prejudicial disclosures exemption is only to be applied in rare situations. This is to stop reporting entities from deliberately concealing details concerning provisions or contingent liabilities and hence in some cases it might be necessary to obtain confirmation from the reporting entity’s legal advisors as to whether or not disclosures required by IFRS would be prejudicial.
For reference IAS 37 Provisions, Contingent Liabilities and Contingent Liabilities sub 92: Disclosure when information is seriously prejudicial
In extremely rare cases, disclosure of some or all of the information required as disclosures regarding Provisions, Contingent liabilities or Contingent assets can be expected to prejudice seriously the position of the entity in a dispute with other parties on the subject matter of the provision, contingent liability or contingent asset. In such cases, an entity need not disclose this information (re disclosures regarding Provisions, Contingent liabilities or Contingent assets), but shall disclose the general nature of the dispute, together with the fact that, and reason why, the information has not been disclosed.
See also below an excerpt of the Vodafone Annual Report 2018 ‘Contingent liabilities and legal proceedings’ of a consumer claim, most of the other cases mentioned here were with other businesses, governmental units or countries. Also look at the description ‘potential future cash outflows, where the likelihood of payment is considered remote, but is not considered probable or cannot be measured reliably’.