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IAS 10 Events after reporting period

Events after the reporting period are split into:

Adjusting events: are events that provide

evidence of conditions that existed at the
reporting date, and the financial statements
should be adjusted to reflect them. Examples

Settlement of a court case that confirms that

the entity had an obligation at the reporting
Evidence that an asset was impaired at the
reporting date (e.g. bankruptcy of a
Finalisations of prices for assets sold or
purchased before year end.
The discovery of fraud or errors that show
that the financial statements are misstated
An adjustment to the disclosed EPS (as par IAS
33) for transactions where the number of
shares altered without an increase in
resources (e.g. bonus issue, share split or
share consolidation).

Non-adjusting events: are events that are

indicative of conditions that arose after the
reporting date. Disclosure should be made in the
financial statements where the outcome of a nonadjusting event would influence the economic
decisions made by users of the financial

A major business combination after the

reporting date (IFRS 3 or the disposing of a
major subsidiary).
Announcement of plan to discontinue an
Major purchases and disposals of assets
Classification of assets as held for sale
Destruction of assets, for example by fire or
Major ordinary share transactions (unless
capitalisation or bonus issue)
Decline in market value of investments

The cut-off date for the consideration of events after the reporting period is the date on which the
financial statements are authorised for issue.
- Normally the financial statements are authorised by the directors before being issued to the
shareholders for approval.
- Where a supervisory board is made up wholly of non-executive directors, the financial statements
will first be authorised by the executive directors for issue to that supervisory board for its
approval. The relevant cut-off date is the date on which the financial statements are authorised for
issue to the supervisory board.
- The date on which the financial statements were authorised for issue should be disclosed.

If a significant event occurs after the authorisation of the financial statements but before the annual
report is published, then the entity is not required to apply the requirements of IAS 10.
- However, if the event was so material that it affects the entitys business and operations in the
future, the entity may wish to discuss the event in the narrative section at the front of the Annual
Review but outside of the financial statements themselves.

Equity dividend (i.e. dividend to ordinary and irredeemable non-cumulative preference shares) should
only be recognised as a liability where they have been declared before the reporting date, as this is the
date on which the entity has an obligation.
- Where equity dividends are declared after the reporting date, this fact should be disclosed but no
liability recognised at the reporting date.

Where the going-concern basis is clearly not appropriate, break-up basis should be adopted.
- The break-up measures the assets at their recoverable amount in a non trading environment, and
a provision is recognised for future costs that will be incurred to break-up the business.


ICAEW CR text 2010

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