Provisions represent a liability of indeterminate time or value and thus because of the specific characteristics they demand special attention when it comes to recognition, measuring and tracking in accounting records. A contingent liability is a potential liability which arises from previous events and whose existence depends on the outcome of an uncertain future event on which the subject cannot completely impact. A contingent liability is also a current liability which arises from previous events but is not acknowledged since it is not probable that payoff of the liability will result in an outflow of resources or the amount of liability is not possible to accurately measure. The basic requirement for liabilities to be recognised as provisions is that they have to be a result of past events. Liabilities which will come out of the future events cannot be recognised as provisions in financial statements, since financial statement showcase the position of the subject at the end of the reporting period. According to the International Accounting Standard 37 – Provisions, contingent liabilities and contingent assets are defined as the criteria for measuring and recognising provisions and contingent liabilities, while Croatian Financial Reporting Standards in HSFI 13 – Liabilities, HSFI 15 – Revenues, HSFI – expenses separately elaborate provisions and contingent liabilities. The Income Tax law and Regulation on income tax quotes tax recognised and tax not recognised provisions, which impacts the tax base of income tax, gross and net income as well as deferred tax assets and deferred tax liability.