PAS 10 Events after the reporting
period.
Scope
PAS 10 prescribes the accounting for disclosure of, events after the
reporting period, including disclosures regarding the date when the financial
statements were authorized for issue.
Events after the reporting period
Events after the reporting period are “those events, favorable and
unfavorable, that occur between the end of a reporting period and the date
when the financial statements are authorized for issue.
For example, Entity A’a reporting period ends on December 31, 20x1
and it’s financial statements are authorized for issue on May 31, 20x1.
Events after the reporting periods are those events that occur within January
1, 20x1 to March 31, 20x1.
The date of authorization of financial statements is the date
when management authorize the financial statements for issue
regardless of whether such authorization is final or subject to
further approval.
Reporting Period.
Date that FS is authorized
for issue.
01/04/2016 31/03/2016 30/06/2016
Events After the reporting Period.
Adjusting Non-Adjusting
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Types of events after the reporting period
1. Adjusting events after the reporting period – Events that provides
evidence of conditions that existed at the end of the reporting
period.
2. Non-adjusting events after the reporting period- Are events that
are indicative of conditions that arose after the reporting period.
Adjusting events after the reporting period
Adjusting events, requires adjustments of amounts recognized in
financial statements for events that provides evidence of conditions existed
at the end of reporting period. Examples of adjusting events:
a. The settlement after the reporting period of a court case that confirms
that entity has a present obligation at the end of reporting period.
b. The receipt of information after the reporting period indicating that
asset was impaired at the end of reporting period. For example:
i. The bankruptcy of a customer that occurs after the reporting
period may indicate that the carrying amount of trade
receivables at the end of the reporting period was impaired.
ii. The sale of inventories after the reporting period may give
evidence to their net realizable value at the end of the reporting
period.
c. Discovery of fraud or errors that indicate the financial statements are
incorrect.
Non-Adjusting events after the reporting period
Indicative of conditions. Does not provide evidence that there is event
only arose after the reporting period.
Non-Adjusting events do not requires adjustments of amounts in
financial statements. However, they are disclosed if they are material
Examples of non-adjusting events:
major business combinations or disposal of a major subsidiary.
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major purchase or disposal of assets, classification of assets as
held for sale or expropriation of major assets by government.
Destruction of major production plant by fire after the reporting
period.
Announcing a plan to discontinue operations.
Announcing a major restructuring reporting date.
Major ordinary share transactions.
Abnormally large changes, after the reporting date. In asset prices
of foreign exchange rates.
Changes in tax rates or tax law.
Entering into major commitments such as guarantees.
Commencing major litigation arising solely out of events that
occurred after the reporting date.
Recognition and Measurements
Adjusting events
An entity shall adjust the amounts recognized in its financial statements
and/or relevant disclosure to reflect such events.
Non-Adjusting events
An entity shall not adjust the amounts recognized in its financial
statements to reflect non-adjusting events after the reporting period.
Dividends
An entity shall not recognize those dividends that are declared after the
reporting date as a liability at the end of the reporting period.
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Going Concern
PAS 10 prohibits the preparation of financial statements on a going
concern basis if management determines after the reporting date that either:
a. It intends to liquidate the entity to cease trading; or
b. That it has no realistic alternative but to do so.
Financial Statements Authorized for Issue
i. Financial statements are authorized for issue when the board of
directors reviews the FS and authorizes them issue.
ii. An entity is required to submit the FS to shareholders for approval
after the statements have been issued.
iii. The financial statements are authorized for issue on the date of
issue by the board of directors and not on the date when
shareholders approve the FS.
Presentation and Disclosure
An entity shall present and disclose information that enables users of the
financial statements to evaluate the effects of events after reporting period:
a. An entity shall disclose the date when the financial statements were
authorized for issue and who gave that authorization. If the entity’s
owner or others have the power to amend the financial statements
after the issue, the entity shall disclose that fact.
b. If an entity receives information after the reporting period about
conditions that existed at the end of the reporting period, it shall
update disclosures that relates to those conditions, in the light of the
additional information.
c. In some cases, an entity needs to update the disclosures in its financial
statements to reflect information received after the reporting period,
even when the information does not affect the amounts that it
recognizes in its financial statements.
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d. If non-adjusting events after the reporting period are material, non-
disclosure could influence the economic decisions that users make on
the basis of the financial statements.
Accordingly, an entity shall disclose the following for each material
category of non-adjusting event after the reporting period: i. the
nature of the event; and ii. an estimate of its financial effect, or a
statement that such an estimate cannot be made.
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References:
International Financial Reporting Standards (IFRS) ® Issued by the
International Accounting Standards Board, 2021.
Millan (2021), Conceptual Framework and Accounting Standards.
National University – Module.
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