Section PS 3390 - Contractual Obligations

Contractual obligations

• Obligations of a government to others that will become liabilities in the future when the terms of those contracts or agreements are met.
• They are distinct from liabilities since no past transaction or event obligating the government to a future sacrifice of economic benefits has occurred at the financial statement date.
• The government does not have a liability until a transaction or event under a contract occurs.
• Disclosure of contractual obligations relates to the unperformed portion of these contracts.
• They are distinct from contingent liabilities since there is no uncertainty related to the existence of the contractual obligation.

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