IAS 10- Events After the Reporting Period

IAS 10

Event After the Reporting Period:

These events, whether they bring positive or negative outcomes, take place between the end of the reporting period and the date when the financial statements receive approval for distribution [IAS 10.3].

Adjusting Events:

  • These are events occurring after the reporting period that provide additional evidence about conditions that existed at the close of the reporting period.
  • Such events encompass instances where the assumption of the enterprise’s ongoing operation, for the whole entity or a part thereof, is found to be inappropriate [IAS 10.3].
  • Financial statements must be adjusted to account for these events, as they enhance the accuracy of reflecting the actual state of affairs [IAS 10.8].

Non-Adjusting Events:

  • Non-adjusting events are those events that suggest conditions arising after the reporting period’s conclusion.
  • These events do not necessitate adjustments to the financial statements since they relate to developments occurring after the reporting period’s close [IAS 10.3].
  • An example of a non-adjusting event is the declaration of dividends after the reporting period, which doesn’t impact the liabilities recognized at the reporting period’s end [IAS 10.12].

Accounting Considerations:

  • Adjustments for adjusting events involve modifying financial statements based on events occurring after the balance sheet date that offer supplementary support for conditions existing at the reporting period’s end [IAS 10.8].
  • On the other hand, non-adjusting events do not require such modifications as they concern conditions arising after the reporting period [IAS 10.10].
  • Situations where going concern assumptions become inappropriate after the reporting period require careful consideration when preparing financial statements [IAS 10.14].

Going Concern Issues:

The principle of preparing financial statements on a going concern basis may be disregarded if post the reporting period’s conclusion, management decides on liquidation, cessation of trading, or when there’s no viable alternative but to do so [IAS 10.14].

Disclosure Requirements:

  • Non-adjusting events of significant importance should be disclosed to ensure that users can make informed evaluations and decisions.
  • The disclosure should include details about the event’s nature and an estimate of its financial impact or an indication that a reasonable estimate cannot be provided [IAS 10.21].
  • Disclosures related to conditions existing at the reporting period’s conclusion should be updated to reflect any new information received after the reporting period [IAS 10.19].
  • Companies must reveal the authorization date of the financial statements and the entity or individual responsible for granting authorization.
  • If parties beyond the issuing entity have the power to make amendments post-issuance, this fact should be disclosed [IAS 10.17].

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