PAS 10:

Events After the Reporting

Period
Lawrence Zyril D. Lizardo, CPA, Macc
Instructor
Learning Objectives
• Define events after the reporting period.
• State the accounting requirements for events after the reporting
period.
Overview
• PAS 10 Events After The Reporting Period contains
requirements for when events after the end of the reporting
period should be adjusted in the financial statements. Adjusting
events are those providing evidence of conditions existing at the
end of the reporting period, whereas non-adjusting events are
indicative of conditions arising after the reporting period (the
latter being disclosed where material).

• PAS 10 was reissued in December 2003 and applies to annual

periods beginning on or after 1 January 2005.
Events After the Reporting Period
• An event, which could be favourable or unfavourable, that
occurs between the end of the reporting period and the date
that the financial statements are authorized for issue.
Two Types of Events After the Reporting
Period
• 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. [IAS 10.3]
• Non-adjusting event: An event after the reporting period that is
indicative of a condition that arose after the end of the reporting
period. [IAS 10.3]
Date of Authorization of The Financial
Statements
• This date is the date when management authorizes the financial
statements for issue regardless of whether such authorization for
issue is for further approval or for final issuance to users.
Examples of Adjusting Events
1. The settlement after the reporting period of a court case that
confirms that the entity has a present obligation at the end of
reporting period.
2. 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 the 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
Examples of Adjusting Events
3. The determination after the reporting period of the cost of asset
purchased, or the proceeds from asset sold, before the end of
reporting period.

4. The discovery of fraud or errors that indicate that the financial

statements are incorrect.
Examples of Non-Adjusting Events Normally
Requiring Disclosures:
1. Changes in fair values, foreign exchange rates, interest rates or
market prices after the reporting period.
2. Casualty losses (e.g., fire, storm, or earthquake) occurring after the
reporting period but before the financial statements were
authorized for issue.
3. Litigation arising solely from events occurring after the reporting
period.
4. Major ordinary share transactions and potential ordinary share
transactions after the reporting period.
Examples of Non-Adjusting Events Normally
Requiring Disclosures:
5. Major business combination after the reporting period.
6. Announcing a plan to discontinue an operation after the reporting
period.
7. Declaration of dividends after the reporting period
Accounting
• Adjust financial statements for adjusting events - events after
the balance sheet date 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.
Accounting
• Do not adjust for non-adjusting events - events or conditions
that arose after the end of the reporting period.

• If an entity declares dividends after the reporting period, the

entity shall not recognize those dividends as a liability at the
end of the reporting period. That is a non-adjusting event.
Going concern issues arising after end of
the reporting period
• An entity shall not prepare its financial statements on a going
concern basis if management determines after the end of 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.
Disclosures
• 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 end of the reporting period to reflect any new
information that it receives after the reporting period about
those conditions.
Disclosures
• 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.
End of Lecture
• Questions?