A provision is neither a general prudence reserve nor a pot used to lower profit. At closing it represents a probable loss or charge arising from an event that already occurred, while amount or timing remains uncertain. If the risk is not described, dated and estimated, the entry is weak before tax is even discussed.
Ask five questions
- Did the event exist before closing?
- Does it create a probable obligation or loss?
- Is the risk specifically identified?
- Can it be estimated reasonably?
- Does the file separate accounting from tax deduction?
1. Start with the event, not a desired number
Collect the contract, claim, correspondence, technical advice and later events that illuminate conditions existing at closing. Then describe the exposure in one sentence: who claims what, because of which event and for what period? A broad label such as ‘customer risks’ is not enough.
| Situation | First reading |
|---|---|
| Documented dispute | estimate obligation and outcome |
| Overdue receivable | assess solvency and recovery |
| Ordinary future repair | usually a future-period cost |
| General downturn | not a provision without a specific risk |
Probable does not mean certain, but it requires more than concern or a precautionary budget.
2. Build a defensible estimate
Use the best information available at the closing date. For one case, use the best-supported scenario; for a homogeneous population, a statistical method can work when its inputs and assumptions are retained.
- List realistic scenarios.
- Record amounts and probabilities used.
- Exclude costs unrelated to the obligation.
- Have the case owner validate assumptions.
- Retain the dated calculation version.
An estimate may change. That is not an error when new information is documented and recognised in the correct period.
3. Record and review every closing
The accountant debits the relevant provision expense and credits the provision account selected from the actual nature and chart used. At every closing the file is reassessed: retain, increase, reduce or reverse.
- Retain: risk and estimate remain valid
- Increase: probable exposure has grown
- Reverse: risk disappears or estimate falls
- Realisation: record the actual charge and handle the provision without double counting
A register with owner, amount, evidence and next review date prevents old provisions from surviving unnoticed.
Do not provide for a planned purchase
Future equipment, a planned campaign or periodic repair without an obligation arising before closing belongs in a budget, not automatically in a provision.
4. Run a separate tax test
The CGI separately controls deduction. A provision must face a not-yet-realised loss or charge made probable by current events, with a clearly specified nature and approximately measurable amount. A provision that becomes irrelevant or was non-compliant is reversed or added back.
- Link the exposure to taxable activity.
- Check any category-specific condition.
- For doubtful debt, track the required judicial action within twelve months.
- Trace charges, reversals and add-backs in the tax bridge.
- Never alter the accounts solely to obtain a deduction.
The correct conclusion can therefore be: justified accounting provision, but no tax deduction this year.
Mistakes to avoid
- Using a round percentage without a file.
- Confusing overdue with irrecoverable.
- Ignoring information learned after closing.
- Keeping a provision after its reason disappears.
- Assuming tax deduction follows the entry.
- Hiding a calculation that cannot be reproduced.
Frequently asked questions
Does a provision always reduce tax?
No. Accounting recognition and tax deduction are separate tests.
Is an unreceived supplier invoice a provision?
A charge certain in principle may be an accrued expense rather than an uncertain provision; classification follows the facts.
How is litigation estimated?
Use claims, legal advice, precedents and available scenarios without presenting the estimate as certainty.
When is a provision reversed?
When the risk disappears, occurs or its best estimate falls, supported by a dated decision and entry.
Does BelloPOS calculate provisions?
No. Its reports may evidence sales or returns, but estimation and posting belong to the accounting close.
What to take away
A sound provision tells a reviewable story: prior event, specific risk, reproducible estimate, approved decision, periodic review and a separate tax conclusion.
Sources
The figures and rules quoted above come from these pages, read on the date given in the article.
- Ministry of Economy and Finance, General Code of Accounting Standardisation, read 1 September 2026
- Moroccan Tax Administration, 2026 General Tax Code
Make the facts reliable before estimating
Traceable sales, refunds and stock provide a cleaner closing file without automating accounting judgement.
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