(Ottawa, Ontario, Canada)
What entries are required at year end to set up a contingency fund?
I'm assuming that you want to set up a contingent liability because there is a probability a liability will be incurred AND the amount of the liability can be reasonably estimated.
Normally this type of entry relates to a future event that may occur such as litigation, guarantees, warranties, outstanding coupons.
As a general rule, it would entail disclosure AND a journal entry debiting an expense account (on the income statement) and crediting a contingent liability account (on the balance sheet).
If the two conditions above are NOT met, you do NOT make a journal entry ... you only make a disclosure if the future event is possible but not probable. I don't believe GAAP permits reserves for general contingencies.
If the future event is unlikely, no disclosure is required.
The accountant preparing the financial statements should really be the person booking this type of advanced accounting entry.
I do not recommend bookkeepers making this type of entry unless they are well versed in GAAP and have worked in an accountant's office (in a supervised environment) for a number of years where they had exposure to the need for this type of entry.