Last update 31/07/2019
IAS 10 Definition: Those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified:
- Those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and
- Those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date).
After the reporting date, but before the financial statements have been authorised for issue, additional information was obtained by the entity for determining the amounts relating to conditions that existed at period end requiring adjustment of the amount reported at the reporting date.
Straight-forward examples:
- The sale of inventory after the reporting date which gives evidence about its net realisable value at the reporting date,
- The bankruptcy of a customer that confirms that an allowance is required against an outstanding balance at the reporting date,
- The discovery of fraud or errors showing that the financial statements at the reporting date are incorrect,
- Amounts receivable as at the reporting date received after the reporting date in respect of insurance claims (i.e. the insured event occurred on or before reporting date),
- The settlement litigation at an amount different from the provision recorded at the reporting date,
Going concern
Events occurring after the reporting date may indicate that the whole or part of the business of the entity ceases to be a going concern. A deterioration in operating results and financial position after the reporting date may indicate a need to consider whether it is proper to use the going concern assumption in the preparation of the financial statements at the reporting date. Also, it might be necessary to at least disclose uncertainties regarding the appropriateness of applying the going concern assumption and why the entity’s management still applies the going concern assumption.
