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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

concern assumption in relation to disposal of a subsidiary
the whole or part of the entity is
not appropriate
 Major purchase or disposal of
assets, classification of assets as
 Settlement after reporting date of held for sale or expropriation of
court cases that confirm the entity major assets by 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 loss existed at  Announcing a plan to discontinue

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reporting date on trade operations

receivables

 Announcing a major restructuring

 Sales of inventories after reporting after reporting date
date that give evidence about their
net realisable value at reporting
date  Major ordinary share transactions

 Determination after reporting date  Abnormal large changes after the

of cost of assets purchased or reporting period in assets prices or
proceeds from assets sold, before foreign exchange rates
reporting date

 Changes in tax rates or tax law

 Discovery of fraud or errors that
show the financial statements are
incorrect.
 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.

 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

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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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