Accounting for Environmental Provisions and Mine Restoration Costs: A Comparative Study of Iranian National Accounting Standards and IAS 37

Abstract

This study aimed to comparatively examine the recognition, measurement, subsequent measurement, presentation, and disclosure requirements for environmental provisions and mine restoration costs under Iranian national accounting standards and IAS 37 and to identify the major areas of convergence and divergence between the two frameworks. This applied study employed a descriptive-analytical, documentary, and comparative design. The primary sample consisted of exactly two standards: Iranian Accounting Standard No. 4, “Provisions, Contingent Liabilities and Contingent Assets,” and IAS 37, “Provisions, Contingent Liabilities and Contingent Assets.” Data were collected using a researcher-developed comparative analysis checklist and analyzed through directed qualitative content analysis and clause-by-clause comparison. The analytical dimensions included the nature of obligations, recognition criteria, initial measurement, risk and uncertainty, discounting, changes in estimates, the relationship between restoration obligations and mining assets, and presentation and disclosure requirements. Each comparison was classified as complete convergence, partial convergence, or substantive difference. Of the 29 accounting requirements compared, 15 cases, representing 51.72%, showed complete convergence, 9 cases, representing 31.03%, showed partial convergence, and 5 cases, representing 17.24%, were classified as substantive differences. Accordingly, 82.75% of the examined items demonstrated at least partial convergence. The highest level of convergence was found in recognition criteria, including the existence of a present obligation, occurrence of a past obligating event, probability of resource outflow, and reliable estimation. The principal differences concerned subsequent measurement, changes in discount rates, adjustments to the carrying amount of the related mining asset, distinction between unwinding of discount and revisions in estimates, and disclosure of uncertainties regarding the amount and timing of settlement. Iranian accounting requirements are substantially aligned with IAS 37 in the fundamental principles governing environmental provisions; however, implementation-level differences in subsequent measurement, asset-related adjustments, and uncertainty disclosures may reduce comparability and transparency in mining companies’ financial statements, indicating a need for more detailed implementation guidance and greater alignment with international requirements.