10/5/2024

FINANICIAL REPORTING

IAS 10

Events after the

reporting period

Le Viet, PhD

DEFINITION

IAS 10.3 defines an event after the reporting period as occurring after the end of the
reporting period but before the financial statements are authorised for issue.
IAS 10 distinguishes between two types of events after the reporting period —
adjusting events and non-adjusting events. Adjusting events must be recognised in
the financial statements, whereas non-adjusting events must be disclosed only.

Financial reporting 2

1
 10/5/2024

Authorisation Date

The authorisation date (i.e., the date when the financial statements could be
considered legally authorised for issuance, generally by action of the board of
directors of the reporting entity) is critical to the concept of events after the
reporting period.
the end of the authorisation Information
reporting date made
period 28/3/X1 Public
31/12/X0
31/3/X1
1/1/X0

Reporting period Events after the reporting period

Financial reporting 3

Illustration

The preparation of the financial statements of Xanadu Corp. for the reporting period ended
December 31, 202X, was completed by the management on February 15, 202X+1. The draft
financial statements were considered at the meeting of the board of directors held on
February 18, 202X+1, on which date the Board approved them and authorised them for
issuance. The annual general meeting (AGM) was held on March 28, 202X+1, after allowing
for printing and the requisite notice period mandated by the corporate statute. At the AGM
the shareholders approved the financial statements. The approved financial statements were
filed by the corporation with the Company Law Board (the statutory body of the country that
regulates corporations) on April 6, 202X+1.
What is the authorisation date?

Financial reporting 4

2
 10/5/2024

Illustration

Solution:
The date of authorisation is February 18, 202X+1, this is the date when the Board approved
them and authorised them for issue (and not the date they were approved in the AGM by the
shareholders).
Thus, all post-reporting period events between December 31, 202X, and February 18,
202X+1, need to be considered by Xanadu Corp. for the purposes of evaluating whether or
not they are to be accounted or reported under IAS 10
HOWEVER!!!

Financial reporting 5

Adjusting events after the reporting period

IAS 10.8 requires an entity to adjust the amounts recognised in its financial statements to
reflect adjusting events after the reporting period. Examples:
• Resolution after the reporting period of a court case that confirms a present obligation
requiring either an adjustment to an existing provision or recognition of a provision
instead of a contingent liability;
• The receipt of information after the reporting period indicating that an asset was
impaired at the end of the reporting period (such as Insolvency of a credit customer at the
year-end)
• The sale of inventories after the reporting period may give evidence that net realizable
value is less than carrying amount at the end of the reporting period.
• The discovery of fraud or errors.
• The determination after the reporting period of bonus payments to employees (related to
the performance period)

Financial reporting 6

3
 10/5/2024

Illustration

Blue Ltd’s financial statements for the year ended 31 December 2016 included a receivable of
$35 000 in respect of a major customer, Red Ltd. On 31 January 2017 the liquidator of Red Ltd
advised that the company was insolvent and would be unable to repay the full amount owed.
The liquidator advised Blue Ltd in writing that Red Ltd’s creditors would receive 10 cents in
the dollar (i.e. 10 cents for every dollar owed). The liquidator estimated that the amount
would be paid in November 2017. Blue Ltd’s financial statements were authorised for issue by
the directors on 25 February 2017.
In accordance with IAS 10, the insolvency of Red Ltd is an adjusting event after the reporting
period because it provides further evidence of the collectability of the receivable at 31
December 2016. Blue Ltd will adjust the receivable from $35 000 to $3500 as follows:
Dr Irrecoverable debts 31,500
Cr Receivables 31,500

Financial reporting 7

Non adjusting events after the reporting period

IAS 10.10 states that an entity shall not adjust the amounts recognised in its financial
statements to reflect non-adjusting events after the reporting period.
10.21 requires disclosure for each material category of non-adjusting event after the
reporting period:
• the nature of the event; and
• an estimate of its financial effect, or a statement that such an estimate cannot
be made.

Financial reporting 8

4
 10/5/2024

Non adjusting events after the reporting period

Examples of non-adjusting events include:

❑ Acquisition or disposal of a subsidiary;
❑ Announcing a plan to discontinue an operation;
❑ Major purchases and disposals of assets;
❑ The destruction of a major production plant by fire;
❑ Announcing or commencing the implementation of a major restructuring;
❑ Abnormally large changes in asset prices or foreign exchange rates;
❑ Significant changes in tax rates and enacted tax laws;
❑ Entering into significant commitments or contingent liabilities; and
❑ Major litigation
❑ Dividends proposed or declared after the reporting period

Financial reporting 9

DISCLOSURE

Financial reporting
10

10