IAS 10 events after the reporting period

What does IAS 10 cover?

Events between the end of the reporting period and the date the financial statements are authorised for issue, usually the date the board approves them, even if results or other financial information have been announced before then. Events after that date are outside IAS 10. The standard decides which events change the amounts in the statements, what must be disclosed, and when the going concern basis can no longer be used.

What are adjusting events?

• Settlement after the year end of a court case that confirms the company had a present obligation at the year end.
• Information showing an asset was impaired at the year end, such as a customer's bankruptcy or a sale of inventory below cost.
• Determination after the year end of the cost of assets bought, or proceeds of assets sold, before it.
• Determination of profit-sharing or bonus payments the company was obliged to make for the year.
• Discovery of fraud or errors showing the financial statements are incorrect.

See IAS 37 provisions and IFRS 9 expected credit losses.

What are non-adjusting events?

Events that reflect conditions arising after the year end: a fall in the market value of investments, destruction of a plant by fire or flood, a major business combination or disposal, announcing a plan to discontinue an operation or a major restructuring, major share transactions, changes in tax rates or laws announced after the year end, and litigation arising solely from later events. Material non-adjusting events are disclosed, with their nature and an estimate of their financial effect or a statement that one cannot be made. See contingent liabilities.

IAS 10 in practice: events before the accounts are approved

A company's year ends on 31 December 2026 and the board approves the accounts on 10 March 2027. All figures are in CU thousand.

The bankruptcy and the settlement give better evidence about conditions that existed on 31 December: the customer was already in difficulty, and the defect had already happened. The fire and the dividend are new events of 2027. See IAS 8 for errors found before approval.

How are dividends treated?

Dividends to equity holders declared after the reporting date are not recognised as a liability at that date, because no obligation existed then. They are disclosed in the notes. Dividends declared before the year end but not yet paid are a liability.

What about going concern?

Going concern overrides the usual split. If, after the reporting date, management determines that it intends to liquidate the company or to cease trading, or that it has no realistic alternative but to do so, the financial statements must not be prepared on a going concern basis, even if the cause arose after the year end. Deteriorating results and financial position after the year end may indicate that the going concern assessment needs reconsidering. From 2027 the going concern requirements sit in IAS 8 under IFRS 18. See climate and going concern.

What must be disclosed about the authorisation date?

The date the financial statements were authorised for issue and who gave that authorisation. If the owners or others can amend the statements after issue, that fact is disclosed. Users need the date to know that events after it are not reflected. Share splits or bonus issues after the year end but before approval are reflected retrospectively in earnings per share; see IAS 33 earnings per share.

How does IAS 10 compare with ASC 855?

US GAAP uses the same split, calling them recognised and nonrecognised subsequent events. SEC filers evaluate subsequent events up to the date the financial statements are issued, and other companies up to the date they are available to be issued, disclosing that date. The concepts and most outcomes are the same. See IFRS vs US GAAP key differences and ASC 855 subsequent events.

This guide is general information. It is not tax or legal advice for your situation.