This document defines and provides examples of adjusting and non-adjusting events that occur after the reporting period in preparing financial statements. Adjusting events provide evidence of conditions that existed at the reporting date and result in changes to figures recognized in the financial statements. Non-adjusting events provide evidence of conditions that did not exist at the reporting date and do not affect financial statement figures, but must be disclosed if material. The date of authorization for issuing the financial statements must also be disclosed.

1. Shariq Chaudhry
+923138577400
shari_ch400@live.co.uk

2. IAS 10
Event After The Reporting
Period

3. Definition
Events after the reporting period are those
events, both favourable and unfavourable, that
occur between the reporting date and the date on
which the financial statements are authorized for
issue.

4. There are twotypes of event:
• Adjusting events
• Non-adjusting events
Financial statements are prepared on the basis of conditions
existing at the reporting date.

5. Adjusting Events
Adjusting events provide evidence of conditions that existed at
the reporting date.
Examples :
• the sale of inventory after the reporting date which gives
evidence about its net realizable value at the reporting date
• The bankruptcy of a customer after the reporting date that
confirms that an allowance is required against an outstanding
balance at the reporting date

6. • Thediscoveryoffraudorerrorsthatshowthatthefinancial
statementsareincorrect
• thesettlementsafterthereportingperiodofacourt
casethatconfirmsthattheentityhadapresent
obligationatthereportingdate.Thiswouldrequirea
provisiontoberecognizedinthefinancialstatements
(oranexistingprovisiontobeadjusted).
Adjustingeventsresultinchangestothefigures
recognizinginthefinancialstatements.

7. Non-adjusting Events
Non-adjusting events provide evidence of conditions that does
not existed at the reporting date.
Examples:
• a major business combination after the reporting date or the
disposal of a major subsidiary
• Announcing a plan to discontinue an operation
• Major purchases and disposals of assets

8. • Destructionofamajorproductionplantbyafireafterthe
reportingdate
• Announcing or commencing a major restructuring
• Abnormally large changes after the reporting date in
assets prices or foreign exchanges rates
Non-adjusting events do not effect any items in the
statements of financial position or comprehensive
income. However , if the events are material, then they
must be disclose , otherwise the financial statements
could be misleading.

9. .
• The Following should be disclosed for material non-adjusting
events:
- the nature of the event
- an estimate of the financial effects, or a statements that
an estimate cannot be made.
• Equity dividends declared or proposed after the year-end are
not a liability at the year end(because no obligation to pay a
dividend exists at that time). They should be disclosed in a
note to the financial statements, This is a non-adjusting event.

10. Date of authorization for issue
The date when the financial statements were authorized for
issue, and who gave that authorization , should be disclosed in
the financial statements.
• If the entity’s owners or other have tge power to emend the
financial statements after the issue, this must also be
disclosed/
• It is important that the authorization date is disclosed as the
financial statements do not reflect events occurring after this
date.