This free, guided checker walks your finance team through the key decision points for IAS 37 and IAS 16 Mining Restoration and Mine Closure. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Mine closure obligations arise from mining licences, environmental regulations, contractual commitments, or customary practice creating a constructive obligation under IAS 37.
No present legal or constructive obligation exists, so no mine closure provision is recognised; assess other environmental obligations separately (IAS 37.14).
Official guidance: IFRS issued standards
Test whether the obligation was incurred as a consequence of acquiring or constructing the mine and its infrastructure; if so, the initial estimate of the restoration cost is an element of the asset's cost under IAS 16.16(c) rather than an immediate expense. Weigh the closure plan and development records to separate construction-driven obligations from obligations that arise only from operating the mine or producing inventory. The common trap is capitalising the whole provision when part of it relates to damage caused by production, which IAS 2 requires to be treated as a cost of inventory instead.
Recognise an IAS 37 provision without IAS 16 capitalisation because the obligation was not incurred on constructing the mining asset (IAS 16.16(c); IAS 37.14).
Official guidance: IFRS issued standards
Use mine closure plans, engineering studies, contractor quotes, inflation assumptions, and regulatory requirements for timing and scope of rehabilitation.
Obtain a mine closure plan or specialist estimate so the obligation can be reliably measured before the provision is recognised (IAS 37.25; IAS 37.36).
Official guidance: IFRS issued standards
IAS 37.45 requires a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the mine closure liability when material.
Complete present-value measurement of the expected expenditure using a documented pre-tax discount rate (IAS 37.45).
Official guidance: IFRS issued standards
Build-up approaches may include risk-free rate, inflation, country risk, and technology or regulatory premiums reflecting uncertainty in timing and amount of closure cash flows.
Document support for a pre-tax rate reflecting the risks specific to the closure liability before sign-off (IAS 37.47).
Official guidance: IFRS issued standards
Capitalize the initial provision as part of mine and infrastructure cost and depreciate over the asset's useful life or units-of-production basis as applicable.
Capitalise the initial provision into the cost of the related mining asset rather than expensing it at recognition (IAS 16.16(c)).
Official guidance: IFRS issued standards
Each period, the discounted provision grows as the settlement date draws nearer; recognise this unwinding of the discount as a finance (borrowing) cost in profit or loss, calculated as the opening provision multiplied by the discount rate (IAS 37.60). Keep it separate from changes in the estimated cash flows or discount rate, which are handled under IFRIC 1.5. The common trap is classifying the unwinding within operating expenses, or capitalising it into the mining asset, rather than presenting it as a finance cost.
Reclassify the periodic discount unwinding to finance cost in profit or loss (IAS 37.60).
Official guidance: IFRS issued standards
Under the cost model, IFRIC 1.5 requires a change in the estimated timing or amount of the closure outflow, or a change in the discount rate, to be added to or deducted from the cost of the related asset and depreciated prospectively. A decrease that exceeds the asset's carrying amount is recognised immediately in profit or loss. Once the asset is fully depreciated, subsequent estimate changes are charged directly to profit or loss.
Adjust the mining asset cost and prospective depreciation for the estimate change under the cost model (IFRIC 1.5).
Official guidance: IFRS issued standards
Closure plans should be refreshed when mine life extends or shortens, processing technology changes, or environmental standards tighten, triggering provision remeasurement.
Update the mine closure plan and reassess the provision before period-end close (IAS 37.59).
Official guidance: IFRS issued standards
IAS 37 requires best-estimate updates for new information on timing, technology, inflation, and regulatory requirements affecting mine rehabilitation costs.
Establish a reporting-date reassessment and provision rollforward control (IAS 37.59).
Official guidance: IFRS issued standards
Disclose nature and timing of mine closure obligations, assumptions on discount rate and inflation, movements in provisions, and mining asset classes including rehabilitation components.
Mine closure provision accounting appears complete, with recognition, capitalisation, unwinding, estimate updates, and disclosures in place (IAS 37.85; IAS 16.73). Complete the IAS 37 provision and IAS 16 mining asset note disclosures before sign-off (IAS 37.84; IAS 37.85; IAS 16.73).
Official guidance: IFRS issued standards
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