Core DRO Concepts and Terminology
A plain-language guide to the core vocabulary of the DRO (IAS 37) module: supersession, scenarios and the weighted average, EPV, the Cost, Recovery, and Net views, the IFRS terms DRO uses, and the split between change in discount and change in estimate.
Applies to: DRO (IAS 37) module | Audience: Customers | Last reviewed: 08/04/2026
In this article
- Supersession
- Scenarios and the weighted average
- Expected Present Value (EPV)
- Cost, Recovery, and Net
- IFRS wording used in DRO
- Change in discount and change in estimate
Supersession
DRO does not use plan layers. When a customer revises a plan, the new plan replaces the prior one in full and becomes the effective plan. Nothing stacks and nothing layers on top of what came before, so each approved change takes over as the current plan. This is a real difference from ARO, which does layer its obligations. DRO works by replacement, much like ERO.
Scenarios and the weighted average
A customer can plan more than one scenario, for example a best estimate and a worst case, and give each one a weight. ENFOS blends them into a single scenario called Weighted Average DRO, marked as calculated, and that blended plan is what the accounting runs on. When there is only one scenario, ENFOS weights it at 100% automatically and the weighted average is simply that scenario.
Expected Present Value (EPV)
EPV stands for Expected Present Value. It is the present value of the weighted average plan discounted back to today, and it is the number that becomes the provision. Wherever EPV appears in the module, read it as the current worth of the obligation.
Cost, Recovery, and Net
Three views appear throughout the module: Cost, Recovery, and Net. Cost is what the customer expects to spend. Recovery is money the customer expects to get back, for example from an insurer or a third party. Net is the difference between the two, which ENFOS calculates automatically.
IFRS wording used in DRO
DRO follows IFRS, so some labels use IFRS terms rather than the US GAAP terms familiar from the ARO and ERO modules. The clearest example is unwinding of the discount, the IFRS name for the steady growth of the provision over time, which ARO calls accretion. Decommissioning asset is the IFRS equivalent of the asset retirement cost. The concepts are the same, expressed in IFRS language.
| IFRS TERM USED IN DRO | WHAT IT CORRESPONDS TO |
|---|---|
| Unwinding of the discount | What ARO calls accretion |
| Decommissioning asset | The IFRS equivalent of the asset retirement cost |
Change in discount and change in estimate
On every plan change, DRO splits the total adjustment into the part driven by a change in the discount rate and the part driven by everything else, which is the change in estimate. The change in estimate also carries an inflation component. The two categories always add up to the total adjustment.
Related articles
- What DRO is and why customers use it
- Choosing the Asset or Expense subtype
- Creating your first DRO plan
- Understanding Change in Discount and Change in Estimate