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FINANCIAL ACCOUNTING AND REPORTING

EVENTS AFTER THE REPORTING PERIOD

Key Definitions

Events after the reporting period: An event, which could be favorable or unfavorable, that occurs
between the reporting period and the date that the financial statements are authorized for issue.

Adjusting event: An event after the reporting period that provides further evidence of conditions
that existed at the end of the reporting period, including an event that indicates that the going
concern assumption in relation to the whole or part of the enterprise is not appropriate.

Non-adjusting event: An event after the reporting period that is indicative of a condition that arose
after the reporting period.

Adjusting event Non-adjusting event

Examples: Examples:

 Events that indicate that the going  Major business combinations or disposal
concern assumption in relation to the of a subsidiary
whole or part of the entity is not
appropriate  Major purchase or disposal of assets,
classification of assets as held for sale
 Settlement after reporting date of or expropriation of major assets by
court cases that confirm the entity government
had a present obligation at reporting
date  Destruction of a major production plant
by fire after reporting date
 Bankruptcy of a customer that occurs
after reporting date that confirms a  Announcing a plan to discontinue
loss existed at reporting date on operations
trade receivables
 Announcing a major restructuring after
 Sales of inventories after reporting reporting date
date that give evidence about their
net realisable value at reporting date  Major ordinary share transactions

 Determination after reporting date of  Abnormal large changes after the

cost of assets purchased or proceeds
from assets sold, before reporting
date
 Discovery of fraud or errors that show
the financial statements are incorrect.
reporting period in assets prices or
foreign exchange rates
 Changes in tax rates or tax law
 Entering into major commitments such
as guarantees

 Commencing major litigation arising

solely out of events that occurred after
the reporting period.

Accounting

Adjust financial statements for adjusting events – events after the reporting period that
provide further evidence of conditions that existed at the end of the reporting period,
including events that indicate that the going concern assumption in relation to the whole or
part of the enterprise is not appropriate.
Do not adjust for non-adjusting events – events or conditions that arose after the
reporting period.

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If an entity declares dividends after the reporting period, the entity shall not recognize those
dividends as a liability at the reporting period. That is a non-adjusting event.

Going Concern Issues Arising After Reporting period

An entity shall not prepare its financial statements on a going concern basis if management
determines after the reporting period either that it intends to liquidate the entity or to cease trading,
or that it has no realistic alternative but to do so.

Disclosure
 Non-adjusting events should be disclosed if they are of such importance that non-disclosure
would affect the ability of users to make proper evaluations and decisions. The required
disclosure is (a) the nature of the event and (b) an estimate of its financial effect or a
statement that a reasonable estimate of the effect cannot be made.

 A company should update disclosures that relate to conditions that existed at the reporting
period to reflect any new information that it receives after the reporting period about those
conditions.
 Companies must disclose the date when the financial statements were authorized for issue
and who gave that authorization. If the enterprise's owners or others have the power to
amend the financial statements after issuance, the enterprise must disclose that fact.

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