IAS 37 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are liabilities of uncertain timing or amount. We are sure to incur the obligation, but we are not sure about either the exact amount of obligation or date when we will be required to pay.
As such, we are required to make ESTIMATES of the expected obligation and recognise the amount in the Statement of Financial Position as a liability.

Contingent liabilities on the other hand refers to POSSIBLE obligations arising from past events that MAY/MAY NOT CRYSTALLISE depending on uncertain future events which are not within the control of the entity. These are not presented on the face of the financials but are shown in the notes to the accounts.

For example: A has been sued by B in the high court. As at the year end, A is not sure of whether he will win or lose the case. He will thus consider the liability to be a contingent liability.
If on the other hand, there is judicial precedent that means that there is a high chance of A losing the case, then A will present the liability as a Provision.He is supposed to estimate the damages he will be required to pay and present the amount under liabilities section of statement of financial position.
It is only when the judge delivers an actual judgment that the provision now becomes an actual liability.

Contingent assets are similar to contingent liabilities. they are possible assets arising from past events and whose existence will be confirmed only the existence or non existence of uncertain future events not wholly within the control of the entity.
where an inflow of economic benefits is probable, the entity may disclose the contingent asset in the notes.