CERTYNEX IFRS ACADEMY

For a restoration provision, Wexmoor has prepared cash flows already increased by a 15% risk margin to reflect the uncertainty about the works. Its internal auditor proposes adding to the provision a second 10% margin "to cover the uncertainty", on top of the 15%. What should be concluded?

Add the second margin, as uncertainty is never sufficiently covered.

Remove the 15% margin and use the risk-free cost only.

Do not add the second margin, which would duplicate the first, and describe the uncertainty in the notes.

Replace both margins with the cost of the worst-case scenario.