IAS 10
Active
Events after the Reporting Period
Prescribes when events occurring after the reporting period should be reflected in the financial statements and the disclosures required about such events.
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Conceptual Framework Linkage
Why the reporting date is not a hard information cut-off
The Conceptual Framework requires financial statements to faithfully represent conditions existing AT the reporting date. IAS 10 recognises that evidence about those conditions sometimes only emerges AFTER year end but BEFORE the statements are finalised – and that this evidence should not be ignored simply because of timing.
HOW IAS 10 MAPS TO THE FRAMEWORK
Faithful representation – adjusting events update the numbers so year-end balances reflect conditions that genuinely existed at that date, using the best available evidence Relevance – material non-adjusting events, though not changing year-end balances, are disclosed because they inform users' decisions about the future Going concern assumption – a foundational assumption under IAS 1 that IAS 10 requires be reassessed using ALL information up to authorisation, not frozen at the reporting date
IAS 10 essentially extends the "measurement window" for existing conditions from the reporting date to the authorisation date – a deliberate Framework-consistent trade-off between timeliness and faithful representation.
Measurement principles applied
IAS 10 does not introduce new measurement bases – it determines WHICH date's evidence should be used to apply the measurement bases already prescribed by other standards.
Event typeEffect
Adjusting eventUpdates the MEASUREMENT of an existing recognised item, or triggers new recognition, using year-end conditions clarified by later evidence
Non-adjusting eventNo change to recognition/measurement; DISCLOSURE only, since the condition arose after the reporting date
Qualitative characteristics in action: the adjusting/non-adjusting distinction is the clearest practical application of the Framework's line between correcting a measurement of what already existed versus informing users about a genuinely new development.
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Scope & Applicability
What IAS 10 covers
IAS 10 prescribes when an entity should adjust its financial statements for events after the reporting period, and the disclosures an entity should give about the date the financial statements were authorised for issue, and about events after the reporting period.
THE REPORTING WINDOW COVERED
Events after the reporting period are those events, favourable and unfavourable, that occur between the END OF THE REPORTING PERIOD and the DATE THE FINANCIAL STATEMENTS ARE AUTHORISED FOR ISSUE – this window can span several weeks or months depending on an entity's reporting timetable.
Applies to EVERY entity with a reporting period, regardless of size or listing status – there are no scope exemptions.
Key definitions you must know
Events after the reporting period
Those events, favourable and unfavourable, that occur between the end of the reporting period and the date the financial statements are authorised for issue.
Adjusting event
An event that provides evidence of conditions that EXISTED at the end of the reporting period.
Non-adjusting event
An event that is indicative of conditions that AROSE after the end of the reporting period.
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Adjusting vs Non-Adjusting – The Core Test
The single distinguishing question
There is only one question that determines classification: DID THE CONDITION EXIST AT THE REPORTING DATE, with the later event simply providing more/better evidence of it? Or did the condition ARISE only after the reporting date?
Adjusting event → recognise/remeasure
Condition existed at year end; the subsequent event is EVIDENCE of that condition. Financial statements are adjusted to reflect it.
Non-adjusting event → disclose only
Condition arose entirely AFTER year end. No new recognition or remeasurement is permitted; only disclosure if material.
Once financial statements are AUTHORISED FOR ISSUE, an entity should NOT adjust for events occurring after that date, even if material – such events fall entirely outside the scope of the reported financial statements (though may require separate communication, e.g. a press release).
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Adjusting Events – Examples & Worked Example
Classic examples of adjusting events
Settlement of a court case AFTER year end that confirms the entity already had a present obligation at the reporting date Bankruptcy of a customer AFTER year end, confirming a trade receivable was already impaired at year end Sale of inventory AFTER year end providing evidence of its net realisable value at year end Determination AFTER year end of the cost of assets purchased, or proceeds from assets sold, before year end Determination AFTER year end of profit-sharing/bonus payments if the entity had a present legal or constructive obligation at year end Discovery of fraud or errors showing the financial statements were incorrect
Worked example – customer bankruptcy
Example 1: Receivable written off after year end
A company's year end is 31 December 20X2. A major customer owing $85,000 (recognised in full as a receivable at year end, no allowance) files for bankruptcy on 15 February 20X3, before the financial statements are authorised for issue on 1 March 20X3. Investigation shows the customer's financial difficulties had been building since November 20X2.
This is an ADJUSTING event – the bankruptcy provides evidence the customer was ALREADY in financial difficulty at 31 December 20X2, meaning the receivable was already impaired at year end.
Dr
Impairment loss (bad debt expense) $85,000
SOPL
Cr
Trade receivables (allowance) $85,000
SOFP
The 20X2 financial statements are adjusted BEFORE authorisation – this is not a subsequent-year 20X3 entry.
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Non-Adjusting Events – Examples & Worked Example
Classic examples of non-adjusting events
A major business combination, or disposal of a major subsidiary, after year end Announcing a plan to discontinue an operation, major purchases/disposals of assets, or expropriation of major assets by government, after year end Destruction of a major production plant by a fire AFTER the reporting period Announcing/commencing a major restructuring AFTER year end Abnormally large changes AFTER the reporting period in asset prices or foreign exchange rates Changes in tax rates or tax law enacted/announced AFTER year end Entering into significant commitments or contingent liabilities, e.g. issuing guarantees, AFTER year end Commencing major litigation arising SOLELY out of events occurring after the reporting period
Worked example – fire destroys a warehouse
Example 2: Warehouse fire after year end
A fire completely destroys one of the entity's warehouses, along with $2m of inventory, on 20 January 20X3 (year end 31 December 20X2), before authorisation for issue. The fire was caused by an electrical fault that occurred entirely after year end.
This is a NON-ADJUSTING event – the condition (the fire and resulting loss) arose entirely AFTER 31 December 20X2. The 20X2 financial statements are NOT adjusted; no write-down of the warehouse/inventory is recorded in 20X2.
Required action: disclose the nature of the event and an estimate of its financial effect (or a statement that such an estimate cannot be made) in the notes to the 20X2 financial statements, GIVEN materiality.
Required action: disclose the nature of the event and an estimate of its financial effect (or a statement that such an estimate cannot be made) in the notes to the 20X2 financial statements, GIVEN materiality.
If the loss is severe enough to bring the going concern basis into question (Section 6), it could instead require preparation of the financial statements on a wholly different basis – a much more significant consequence.
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Going Concern – The Critical Override
Why going concern deterioration is always adjusting – even from post-year-end causes
IAS 10 contains a unique rule: an entity must 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 cease trading, or that it has no realistic alternative but to do so.
This is treated as an adjusting event of the most fundamental kind – NOT because the underlying cause existed at year end (it may not have), but because the deterioration in going concern status is so fundamental that the ENTIRE BASIS of preparation changes, requiring a switch to break-up/liquidation basis accounting for the whole set of financial statements, regardless of whether the specific cause was adjusting or non-adjusting in the conventional sense.
This is a deliberately distinct rule from the general adjusting/non-adjusting framework and is one of the most heavily tested conceptual points in IAS 10 – going concern deterioration after year end but before authorisation ALWAYS requires action, unlike ordinary non-adjusting events which are merely disclosed.
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Dividends Declared After the Reporting Period
Dividends are always non-adjusting
If dividends to holders of equity instruments are declared AFTER the reporting period, an entity should NOT recognise those dividends as a liability at the end of the reporting period – there is no present obligation at year end, since the declaration (the obligating event) has not yet occurred.
This applies EVEN IF the dividend relates to profits earned during the reporting period being reported on – the KEY event is the declaration date, not the period the profit relates to.
Worked example & disclosure requirement
Example 3: Dividend declared after year end
A company's board declares a final dividend of $0.30 per share on 10 February 20X3, in respect of the year ended 31 December 20X2, at a board meeting before the financial statements were authorised for issue.
No liability is recognised in the 20X2 statement of financial position – the obligation did not exist at 31 December 20X2.
Disclosure only: the amount is disclosed either on the face of the SOFP as a separate component of equity, or in the notes, per IAS 1/IAS 10.
Disclosure only: the amount is disclosed either on the face of the SOFP as a separate component of equity, or in the notes, per IAS 1/IAS 10.
A very commonly tested scenario – students often incorrectly recognise the dividend as a year-end liability simply because it "relates to" the reported profits.
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Authorisation Date – Determining the Window's End
Identifying the "date of authorisation for issue"
The process for authorising financial statements for issue varies depending on management structure, statutory requirements, and procedures for preparing/finalising them – the ENTITY must determine, based on its specific facts, when this date occurs, and disclose it.
SCENARIO A – MANAGEMENT ISSUES TO A SUPERVISORY BOARD
The financial statements are authorised for issue when management authorises them for issue to the supervisory board, NOT when the supervisory board subsequently approves them.
SCENARIO B – SHAREHOLDER APPROVAL REQUIRED
The date of authorisation for issue is the date the financial statements are issued (e.g. to shareholders for approval), NOT the later date shareholders approve them at the AGM – shareholder approval does not extend the subsequent events window.
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Disclosure Requirements
Required disclosures
MANDATORY DISCLOSURES
Date the financial statements were authorised for issue, and WHO gave that authorisation If the entity's owners or others have the power to amend the financial statements after issue, that fact must be disclosed
FOR EACH MATERIAL CATEGORY OF NON-ADJUSTING EVENT
The nature of the event An estimate of its financial effect, or a statement that such an estimate cannot be made
If new information is received AFTER year end about conditions that existed at year end, an entity updates its disclosures about those conditions in light of the new information, even where the underlying event does not require a formal adjustment.
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Critical Judgments & Estimates
Where management judgement matters most
SIGNIFICANT JUDGEMENTS
Whether an event provides evidence of conditions existing at year end (adjusting) or reflects entirely new conditions (non-adjusting) – the single most tested judgement in the standard Determining the correct authorisation-for-issue date, especially in multi-tier governance structures Whether a going concern deterioration is severe enough to require a change in the basis of preparation
SIGNIFICANT ESTIMATES
The financial effect of a material non-adjusting event, where an estimate is practicable Quantifying an adjustment where new evidence only partially clarifies a year-end condition
A single event can sometimes contain BOTH adjusting and non-adjusting elements – e.g. a court case settlement might confirm an existing obligation (adjusting) while ALSO triggering a new, separate claim arising only from the settlement itself (non-adjusting) – careful separation is required.
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IFRS vs US GAAP – Key Differences
Comparison – IAS 10 vs US GAAP (ASC 855)
FeatureIFRS (IAS 10)US GAAP
TerminologyAdjusting / non-adjusting events"Recognized" and "non-recognized" subsequent events – conceptually equivalent
End of the evaluation windowDate financial statements are authorised for issueSEC registrants: date financial statements are ISSUED (filed); other entities: date available to be issued – subtly different from "authorised"
Re-evaluation on reissuanceGenerally not re-evaluated for a NEW subsequent events window on reissuanceSEC registrants generally do NOT re-evaluate; other entities may need to evaluate through the reissuance date under specific circumstances
Going concern deteriorationFundamental override – changes the basis of preparation entirelySimilar substantive requirement (ASC 205-40) to evaluate and disclose substantial doubt about going concern
The two frameworks are broadly converged in substance; the main practical nuance is the precise DATE used to define the end of the subsequent-events window (authorisation vs issuance), which can matter in specific fact patterns for SEC filers.
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Statement Mapping – Where Every Subsequent Event Lands
Comprehensive event-to-statement mapping table
Event / transactionStatement(s) affectedNotes
Adjusting event – remeasurement of an existing asset/liabilitySOPL SOFPRecognised in the reporting period being finalised, not the following period
Adjusting event – new obligation confirmed to have existed at year endSOPL SOFPNew provision/liability recognised in the current reporting period
Non-adjusting event, material–No SOFP/SOPL change; disclosed in notes only
Going concern deterioration after year endSOFP SOPLEntire basis of preparation changes to break-up/liquidation basis
Dividends declared after year end–NOT recognised as a liability; disclosed only
Discovery of fraud/error affecting reported figuresSOPL SOFPAdjusting event; corrected before authorisation, distinct from IAS 8 prior period error correction after issuance
Authorisation date and authorising bodyNotesMandatory disclosure in every set of financial statements
Estimated financial effect of material non-adjusting eventsNotesOr a statement that no estimate can be made
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Related Standards – Cross-Reference Map
How IAS 10 connects across the IFRS body of literature
StandardNature of the connection
IAS 1Requires management's going concern assessment to consider ALL available information, including events after the reporting period – the direct trigger for IAS 10's going concern override
IAS 37Court case settlements and confirmed obligations arising as adjusting events determine whether a provision recognised (or not recognised) at year end under IAS 37 needs to change
IAS 2Post-year-end sale prices provide adjusting evidence for testing inventory's net realisable value at the reporting date
IAS 36Post-year-end evidence (e.g. a confirmed customer loss, market crash) may indicate impairment indicators existed at year end, triggering an adjusting remeasurement
IAS 8Distinguishes an IAS 10 adjusting event (corrected BEFORE authorisation) from an IAS 8 prior period error (discovered AFTER a prior period's statements were already authorised/issued)
IAS 33Certain post-year-end share transactions (e.g. bonus issues, share splits) require RETROSPECTIVE adjustment of EPS calculations even though they are otherwise non-adjusting events
IFRS 5A decision to sell a major asset/operation made after year end is generally a non-adjusting event, since the "held for sale" criteria are assessed as at year end, not a later date
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Quick-Reference Glossary
Reporting period
The period covered by the financial statements – typically 12 months, ending on the reporting date.
Authorisation for issue
The point at which the entity's management/board formally releases the financial statements for external use – defines the end of the subsequent events window.
Break-up basis
A basis of accounting used when an entity is no longer a going concern – assets and liabilities are measured at amounts expected to be realised on liquidation, rather than on an ongoing operational basis.
Obligating event
An event that creates a legal or constructive obligation, leaving the entity no realistic alternative but to settle it – the trigger for dividend recognition under IAS 10/IAS 37.
Material
Information whose omission or misstatement could reasonably be expected to influence users' decisions – the threshold for requiring non-adjusting event disclosure.
Supervisory board
A separate governance body (common in some jurisdictions) that may need to approve financial statements AFTER management has already authorised them for issue to that board.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows
History & Development
Jul-1977
Exposure Draft E10 Contingencies and Events Occurring After the Balance Sheet Date
Oct-1978
IAS 10 Contingencies and Events Occurring After the Balance Sheet Date effective 1 January 1980
1994
IAS 10 (1978) was reformatted
Aug-1997
Exposure Draft E59 Provisions, Contingent Liabilities and Contingent Assets
Sep-1998
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
01-Jul-1999
Effective date of IAS 37, which superseded those portions of IAS 10 (1978) dealing with contingencies
Nov-1998
Exposure Draft E63 Events After the Balance Sheet Date
May-1999
IAS 10 (1999) Events After the Balance Sheet Date superseded those portions of IAS 10 (1978) dealing with events after the balance sheet date
01-Jan-2000
Effective date of IAS 10 (1999)
18-Dec-2003
Revised version of IAS 10 issued by the IASB
01-Jan-2005
Effective date of IAS 10 (Revised 2003)
06-Sep-2007
Retitled Events after the Reporting Period as a consequential amendment resulting from revisions to IAS 1