Events may occur between the end of the reporting period and the date when financial statements are authorized for issue which may present information that should be considered in the preparation of financial statements. IAS 10 Events after the Reporting Period provides guidance as to which events should lead to adjustments in the financial statements and which events shall be disclosed in the notes to financial statements.
Events after Reporting Period are those that occur between the end of the reporting period and when the financial statements are authorized for issue.
The date of authorization for issue is usually taken to be the date when the board of directors authorizes the issue of financial statements. Where management is required to issue its financial statements to a supervisory board or shareholders for approval, the authorization is considered to be complete upon the management's authorization for issue of financial statements rather than when the supervisory board or shareholders give their approval.
Events after the end of reporting period may be classified into two types:
If any events occur after the end of the reporting period that provide further evidence of conditions that existed at the end of reporting period (i.e. Adjusting Events), then the financial statements must be adjusted accordingly.
Examples of Adjusting Events include:
Entity shall not adjust the financial statements in respect of those events after the end of reporting period that reflect conditions that arose after the end of reporting period (i.e. Non-Adjusting Events).
Examples of Non-Adjusting Events include:
The nature and estimate of the financial impact of material non-adjusting events shall be disclosed in the financial statements.
Non-Adjusting Events are considered material if they could influence the economic and financial decisions of the users of financial statements.
Examples of material non-adjusting events include:
Entity shall not prepare financial statements on the going concern basis if events after the reporting period indicate that the entity shall not be able to continue as a going concern irrespective of whether such events are indicative of conditions that arose after the end of reporting period or not.
If financial statements are not prepared on the going concern basis, it shall disclose this fact in the financial statements along with any major uncertainties that may cast considerable doubt regarding the entity's ability to operate as a going concern.