This document summarizes the key points of IAS 10 Events After the Reporting Period. It discusses the definition of an authorized issue date and the two types of events - adjusting events and non-adjusting events. Adjusting events require adjustment to the financial statements if they provide evidence of conditions existing at the reporting date. Non-adjusting events do not result in adjustment but require disclosure of the nature and estimated financial effects. It also covers going concern assessment and treatment of dividends declared after the reporting period.
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IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.
IAS 10 2018 IAS 10 BC International Accounting Standard 10 Events after the Reporting Period
Objective
1
The objective of this Standard is to prescribe:
(a)
when an entity should adjust its financial statements for events after the reporting period; and
(b)
the disclosures that an entity should give about the date when the financial statements were
authorised for issue and about events after the reporting period.
The Standard also requires that an entity should not prepare its financial statements on a going concern
basis if events after the reporting period indicate that the going concern assumption is not appropriate.
Scope
2
This Standard shall be applied in the accounting for, and disclosure of, events after the reporting
period
IAS-1: Presentation of Financial StatementsAmit Sarkar
IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.
IAS 10 2018 IAS 10 BC International Accounting Standard 10 Events after the Reporting Period
Objective
1
The objective of this Standard is to prescribe:
(a)
when an entity should adjust its financial statements for events after the reporting period; and
(b)
the disclosures that an entity should give about the date when the financial statements were
authorised for issue and about events after the reporting period.
The Standard also requires that an entity should not prepare its financial statements on a going concern
basis if events after the reporting period indicate that the going concern assumption is not appropriate.
Scope
2
This Standard shall be applied in the accounting for, and disclosure of, events after the reporting
period
An event that occurs after a reporting period but before the Corporate finance training program for that period have been issued or are available to be issued is called a subsequent event. Under FASB ASC 855, organizations have a responsibility to consider events that occur subsequent to year-end.
Presentation on Covid impact on financial reporting Taxmann
Coverage of the Webinar
1. COVID-19: PANDEMIC AND THE RIPPLE EFFECT
A. Unprecedented Human, Economic and Financial Crisis facing the world with widespread disruption
B. Due to the significant downturn in the economic activities and the long term impact of the same, the RBI, as well as leading credit rating agencies (Moody, S&P, Fitch, and CRISIL), have predicted a shrinkage of the GDP during FY 2020-21 of 2%-5% and all-time high unemployment.
2. FINANCIAL CHALLENGES & MITIGATING PLANS
A. An entity engaged in tourism and hospitality is heavily dependent upon the tourists from India traveling overseas and foreign nationals visiting India. In the light of COVID-19 outbreak across the globe, the entity has analyzed the likely impact of customers' behavior coupled with bleak employment scenario on its revenue over the next year.
B. This review has indicated possible substantial operating losses during the next financial year i.e. 2020-21.
C. The entity is exploring the possibility of recognizing a certain amount of operating losses as the provision in the financial
statements of the current year itself i.e. 2019-20.
3.AUDITING CHALLENGES
A. COVID -19 caused unprecedented situations
in the businesses and the environment. Changes at such a large scale impacted each industry.
B. Albeit auditors faced many difficulties in auditing areas of financial statements, challenges faced while auditing inventory
has been taken as an example and discussed in the following slides.
4. IMPACT ON FINANCIAL REPORTING
A. Updated financial forecasts for the foreseeable future, but not less than a 12-month period;
B. Updated sensitivity analysis;
C. Forecasted compliance, or lack thereof, with banking and other covenants for the foreseeable future; and
D. Any other information available up to the date the financial statements are authorized for issuance.
5. OTHER KEY CONSIDERATIONS
A. Employee Benefits
B. Internal Financial Control over Financial Reporting
C. Data Confidentiality and Cyber Security
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The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
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IAS 10 : Events after the reporting period
1. IAS 10
Events After the Reporting Period
Prepared by
Amit Sarkar
CFO 4th Batch
Email: amitsarkarshuvro@gmail.com
IAS 10
2. Focus is here!
Beginning of End of FS authorized
reporting period reporting period for issue
❖ Meaning of ‘authorized for issue’
IAS 10 Event after the reporting period is favorable or unfavorable event
that occurs between :
☞ The end of the reporting period and
☞ The date that the financial statements are authorized for issue.
3. ❖ There are two types of event:
1. Adjusting events
2. Non-adjusting events
Financial statements are prepared on the basis of conditions
existing at the reporting date.
IAS 10
4. Adjusting events
Adjusting event is the event that arose after the end of the
reporting period, but provides further evidence of
conditions that existed at the end of the
reporting period.
Accounting treatment: financial statements
should be adjusted for adjusting events.
IAS 10
5. • 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
• The discovery of fraud or errors that show that the financial
statements are incorrect
• the settlements after the reporting period of a court case that
confirms that the entity had a present obligation at the reporting
date. This would require a provision to be recognized in the
financial statements (or an existing provision to be adjusted).
Examples
IAS 10
6. Non-adjusting event
Non-adjusting event is an event after the reporting period that
indicates conditions arising after the end of the reporting period.
Accounting treatment: do not adjust financial statements
for non-adjusting events. The following disclosure shall be
made:
☞ The nature of the event, and
☞ An estimate of its financial effect or a statement that
such an estimate cannot be made.
IAS 10
7. 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
• Destruction of a major production plant by
a fire after the reporting date
• Announcing or commencing a major restructuring
• Abnormally large changes after the reporting date in assets prices
or foreign exchanges rates
IAS 10
8. GOING CONCERN
Entity shall not prepare financial statements on going concern basis if
management determines after the reporting period :-
☞ to liquidate the entity, or
☞ to cease trading, or
☞ that there is no realistic alternative but to do so
IAS 10
Problem
Rudro has a trade debtor that owes 15 million on 30 June 2019. On 21 July 2019, the
debtor goes into liquidation. Rudro is informed that it will receive nothing from the
liquidation. Rudro is unable to raise funds to recover from this loss, and is certain to be
liquidated.
How shall this situation be reflected in the financial statements for the year ended 30
June 2019 ?
Solution
The financial statements to 30 June 2019 should be produced on a liquidation basis, not a
going-concern basis.
9. DIVIDENDS
If an entity declares dividends to shareholders after the end of the
reporting period, the entity shall not account for those dividends as
for a liability at the reporting date.
If dividends are declared after the end of the Reporting Period, but
before the financial statements are approved for issue, the
dividends are disclosed in the notes to the financial statements.
IAS 10
Problem:
KLM has prepared its financial statements for the year ended 31 December 20X1.
On 30 January 20X2, KLM’s directors declare dividends amounting to CU 2 million.
How shall this transaction be reported in the financial statements for the year
ended 31 December 20X1?
Solution:
This is a non-adjusting event. KLM does not change the figures in its financial
statements for the year 20X1, but discloses the post-reporting-period dividends in
the note on retained earnings.
10. DISCLOSURE
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.
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.
IAS 10