CONTINGENT AND REAL LIABILITIES - 8751-FEB-1998
A contingent liability is defined as an obligation relating to a past transaction or event that may be payable in the future. The distinction between a real liability and a contingent liability depends on the certainty of the payment to be made. A real liability exists when it is probable that the payment will be made. A contingent liability exists when it is only possible that the payment will be made.
Real liabilities payable from an existing appropriation must be recognized at year-end even though the amount may be estimated in whole or part. Real liabilities not properly payable from an existing appropriation will be reported as payable from a future appropriation.
A statement of all contingent liabilities and liabilities payable from a future appropriation will be prepared at year-end. These liabilities will be reported in Statement No. 22, Statement of Contingent Receivables and Contingent Liabilities. See SAM Section 7979. Agencies will establish appropriate memorandum accounts as a record of these liabilities.