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Subsequent events are defined as any event occurring after the balance sheet date
Subsequent events therefore include BOTH
Events occurring between the period end and the date of the auditors report and
Facts discovered after the date of the auditors report.
Accounting rule IAS 10- events after the reporting period.
IAS 10 covers events) both favourable and unfavourable) that occur between the date of the
financial statements (referred as the balance sheet date in the IAS) and the date when the
financial statements are authorized for issue.
IAS 10 Events after the reporting period identifies 2 types of subsequent events (both
favourable and unfavorable) :
Adjusting events
Non adjusting events
NOTE: Post balance sheet events covered by IAS 10 covers period after balance sheet to
date when FS authorize for issue e.g. shorter than subsequent events period as per ISA 560
Adjusting events: these are events providing additional evidence relating to conditions existing
at the balance sheet date: they require adjustments in the FS provided it is material.
Examples:
Provn for doubtful debts.
Write down of inventories
The determination of the purchase or resale price of non current assets purchased or sold
before the year end
Amounts received or receivable in respect of insurance claims which were being
negotiated at the b/s date.
Non adjusting events: are events concerning conditions which arose after the balance sheet
date, but which may be of such materiality that their disclosure is required to ensure that the FS
are not misleading.
FS are not adjusted with non adjusting events.
Examples: