IAS 10 Events After the Reporting Date

IAS 10 prescribes when an entity should adjust its financial statements for events that occur after the reporting period and what disclosures are required.

These are events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.

Adjusting events – Require changes to the financial statements.
Non-adjusting events – Do not require changes but may need disclosure.

An event that provides additional evidence about conditions that existed at the reporting date, requiring the financial statements to be adjusted.

✅ Settlement of a legal case that confirms a liability existed at year-end
✅ Bankruptcy of a customer indicating an impairment loss
✅ Discovery of fraud or errors in the financial statements

An event that does not provide evidence of conditions that existed at the reporting date but may still need disclosure.

✅ A major business combination or disposal after the reporting date
✅ Natural disasters that cause significant damage
✅ Significant share price decline after year-end

The nature of the event
An estimate of its financial effect (if possible)

Dividends declared after the reporting date should not be recognized as a liability at the reporting date but must be disclosed in the notes.

The date when the financial statements are authorized for issue, usually the date of board approval.

IAS 10 regulates the treatment of events that take place after the reporting date (for us 31 December
20X6) and the date the accounts are authorised for issue. As our financial statements are not yet
finalised we are in the period regulated by IAS 10. There are two main types of event after the reporting
period: adjusting and non-adjusting.