From time to time, the LLP could be involved in disputes in the ordinary course of business which may give rise to claims. Provision is made in the financial statements for all claims where costs are likely to be incurred and represents the cost of defending and concluding claims.
The LLP carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance as to do so could seriously prejudice the position of the LLP.
The LLP assesses for liabilities including property dilapidation provisions for which the present value of the obligation is provided for on a systematic basis by reference to estimated amounts until the final settlement amount crystallises.
A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, and is provided for where the outflow of economic resources from the LLP is probable and can be reliably estimated.