Events after the reporting period
IAS 10 defines events after the reporting period as those events, favourable or unfavourable that occur between the date of the statement of financial position and the date when the financial statements are authorised for issue
The standard classifies events after the reporting period as either
Those that show evidence of conditions that existed at the date of the SOFP which are adjusting events for the reporting period
Those that are indicative of conditions that arose after the date of the SOFP which are non adjusting events for the reporting period
Material adjusting events should be reflected in the financial statements by adjusting the amounts recognised
An adjusting event includes an event that provides evidence that the reporting entity is no longer a going concern, if this is the case the entity should prepare its accounts on a going concern basis
Non adjusting events do not rigger a change in accounting treatment because the events occurred after the reporting period and there is no evidence to justify a change in accounting treatment as the balance sheet date
Non adjusting events also includes dividends declared after the reporting period, this is because the liability to make the dividend payments did not exist at the balance sheet date
Non adjusting events fall to be recognised in the following accounting period however they may require disclosure if material and if it is expected that they would affect the economic decisions made by users of the financial statements. The disclosures under IAS 10 are
The nature of the event
An estimate of the financial effect a statement that a reasonable estimate of the financial effect cannot be made
Disclosures in the financial statements should also be updated to reflect conditions existing at the reporting date in relation to which new information exists
Examples of material adjusting events
A court case settlement confirming the existence of a present obligation as at the end of the reporting period, in which case a provision will need to be recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets instead of the disclosure of a contingent liability in the notes
The discovery of material misstatements or fraud that show the financial statements to be inaccurate
The bankruptcy of a major customer which results in trade debtors being non recoverable
The presence of persuasive evidence that the entity can no longer continue as a going concern
Examples of non adjusting events after the reporting period include
A fall in the market value of investments between the balance sheet date and the date when the financial statements are approved for issue
An announcement that part of the business is no longer viable and will cease to operate
The sale of a major subsidiary
click to edit