• PAS 10

Events After the Reporting Period

Introduction

PAS 10 prescribes the accounting for, and disclosures of, events after the reporting period, including
disclosures regarding the date when the financial statements were authorized for issue.

Events after the Reporting Period

Events after the reporting period are “those events, favorable and unfavorable, that occur between the
end of the reporting period and the date when the financial statements are authorized for issue”. (PAS
10.3)

For example, Entity A’s reporting period ends on December 31, 20x1 and its financial statements are
authorized for issue on March 31, 20x2. Events after the reporting period are those events that occur
within January 1, 20x2 to March 31, 20x2.

 The date of authorization of the financial statements is the date when management authorizes
the financial statements for issue regardless of whether such authorization is final or subject to
further approval.

Two types of events after the reporting period

1. Adjusting events after the reporting period – are events that provide evidence of conditions
that existed at the end of the reporting period.

2. Non-adjusting events after the reporting period – are events that are indicative of conditions
that arose after the reporting period.

Adjusting events after the reporting period

Adjusting events, as the name suggests, require adjustments of amounts in the financial statements.
Examples of adjusting events:

a. The settlement after the reporting period of a court case that confirms that the entity has a
present obligation at the end of the reporting period.

b. The receipt of information after the reporting period indicating that an asset was impaired at
the end of reporting period. For example:

i. The bankruptcy of a customer that occurs after the reporting period may indicate that
carrying amount of a trade receivable at the end of reporting period is impaired.

ii. The sale of inventories after the reporting period may give evidence to their net
realizable value at the end of reporting period.
 c. The determination after the reporting period of the cost of asset purchased, or the proceeds
from asset sold, before the end of reporting period.

d. The determination after the reporting period of the amount of profit-sharing or bonus
payments, if the entity had a present legal or constructive obligation at the end of reporting
period to make such payments.

e. The discovery of fraud or errors that indicate that the financial statements are incorrect. (PAS
10.9)

Non-adjusting events after the reporting period

Non-adjusting events do not require adjustments of amounts in the financial statements. However, they
are disclosed if they are material. Examples of non-adjusting events:

a. Changes in fair values, foreign exchange rates, interest rates or market prices after the reporting
period.

b. Casualty losses (e.g., fire, storm, or earthquake) occurring after the reporting period but before
the financial statements were authorized for issue.

c. Litigation arising solely from events occurring after the reporting period.

d. Significant commitments or contingent liabilities entered after the reporting period, e.g.,
significant guarantees.

e. Major ordinary share transactions and potential ordinary share transactions after the reporting
period.

f. Major business combination after the reporting period.

g. Announcing, or commencing the implementation of, a major restructuring after the reporting
period.

h. Announcing a plan to discontinue an operation after the reporting period.

i. Change in tax rate enacted after the reporting period.

j. Declaration of dividends after the reporting period. (PAS 10.9)

Dividends

Dividends declared after the reporting period are not recognized as liability at the end of the reporting
period because no present obligation exists at the end of reporting period.

Going Concern
PAS 10 prohibits the preparation of 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.