ASHIK IQBAL ACA CPA (USA)

CERTIFICATE COURSE ON IFRS

IAS 10 EVENTS AFTER THE REORTING PERIOD

22 March 2021
DISCLAIMER

• This material has been developed for training and education

purposes for the participants of Certificate Course on IFRS offered
by ICAB. This should not be distributed or shared with anyone who
is not a participant of this course.
• Any distribution of this material outside the participant group is
strictly prohibited.
• This material and the facilitation do not create any client &
consultant relationship between the participants and the facilitator.
• For any real life decision making regarding financial reporting and
auditing, please refer to the original IFRSs. Views expressed in
this document are personal.
GROUND RULES

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MAIN CONCEPTS
MAIN CONCEPTS

1. Events after the reporting period

• favourable and unfavourable,

• occur between the end of the reporting period and the date
when the financial statements are authorised for issue.

2. Adjusting events after the reporting period

Evidence of conditions that existed at the end of the reporting

period; and

3. Non-adjusting events after the reporting period).

Indicative of conditions that arose after the reporting period

MAIN CONCEPTS

1. Adjusting events after the reporting period

Shall adjust the amount recognized in its financial statements

2. Non-adjusting events after the reporting period).

Shall not adjust the amount recognized in its financial

statements
MAIN CONCEPTS

Financial statements are authorised for issue – What does this

mean?

• Not defined in IAS 10

• IAS 10 provides some guidance
• Consider management structure/statutory
requirements/procedures followed in preparing/finalizing FS
EXAMPLE FROM IAS 10

The management completes draft financial statements for the year to

31 December 20X1 on 28 February 20X2.

On 18 March 20X2, the board of directors reviews the financial statements

and authorizes them for issue.

The entity announces its profit and selected other financial information on 19
March 20X2.

The financial statements are made available to shareholders and others on

1 April 20X2.

The shareholders approve the financial statements at their annual meeting on

15 May 20X2 and the approved financial statements are then filed with a
regulatory body on 17 May 20X2.

When was the FS authorised for issue?

The FSs are authorised for issue on 18 March 20X2. FSs have been submitted
to shareholders for approval after FSs have been issued.
 DIVIDEND & GOING
CONCERN

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DIVIDEND AND GOING CONCERN

• If an entity declares dividends to holders of equity

instruments after the reporting period, the entity shall not
recognize those dividends as a liability at the end of the
reporting period.

• An entity shall not prepare its financial statements on a

going concern basis if after the reporting period
management determines that (see Q3)

a) it intends to liquidate the entity or

b) to cease trading, or
c) that it has no realistic alternative but to do so.
 QUESTIONS

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QUESTIONS

Q1: An entity has a portfolio of equity instruments. After the end of the
reporting period, there has been a substantial fall in the value of the stock
market. The equity instruments are measured at fair value through profit or
loss under IFRS 9. How should the entity treat this event?

Answer Q1: The entity is not permitted to adjust the fair value of the shares
for the decline in value after the end of the reporting period (i.e., the event is
a non-adjusting event after the reporting period). If the impact is significant,
however, the entity may be required to disclose the decline in fair value
between the end of the reporting period and the date when the financial
statements are authorised for issue.
QUESTIONS

Q2: An entity sells goods on credit to a third party. At the end of the
reporting period, there was no doubt about the customer's ability to pay.

In the process of the finalisation of the financial statements, the entity is

informed that the customer is going into liquidation as a result of events that
occurred after the reporting period.

Answer Q2: No impairment of the trade receivable should be recognized in

the financial statements, because the statement of financial position
appropriately reflects the circumstances as at the end of the reporting period.
If the impact is significant, however, the entity may be required to disclose
the impact of the customer's default after the reporting period
QUESTIONS

Q3: An owner-managed entity's reporting date is 31 December 2020. At the

reporting date, the entity is trading profitably, and the owner-manager
expects that it will continue to do so; they have no intention to liquidate the
entity or to cease trading.

But in March 2021, before the financial statements are authorised for issue,
the owner-manager experiences an unexpected change in personal
circumstances and decide to put the entity into voluntary liquidation.

Shall management prepare financial statements on a going concern basis?

Answer Q3: The entity's 20X1 financial statements should be prepared on a

basis other than that of a going concern.
DISCLOSURES
AUTHORISATION FOR ISSUE

An entity shall disclose the date when the financial statements were
authorised for issue and who gave that authorization.

If the entity’s owners or others have the power to amend the financial
statements after issue, the entity shall disclose that fact.
QUESTIONS

Q4: On 1 August 2020, the directors of R Limited authorised its financial

statements for the year ended 30 June 2020 to be issued to its shareholders.
The financial statements are due to be filed with a regulator on 1 September
2020.

On 20 August 2020, an event occurs that would have been classified as a

non-adjusting event after the reporting period in accordance with IAS 10 if
the event had occurred before the financial statements were authorised for
issue.

The directors of R Limited would like to amend (via disclosure) the financial
statements that are to be filed with the regulator. They would like to use a
'dual dating' procedure whereby the authorization date for the financial
statements in general would be disclosed as 1 August 2020, but the specific
note containing the updated disclosures would be described as authorised on
20 August 2020.

Answer Q4: Entity R is not permitted to dual date its financial statements as
per IFRS. The date of authorization for financial statements in IAS 10:17 and
18 refers to the financial statements as a whole; there is no provision for
different components of the financial statements to be authorised for issue at
different dates.
 Q&A

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THANK YOU