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FINANCIAL ACCOUNTING AND REPORTING

EVENTS AFTER THE REPORTING PERIOD
Key Definitions
Events after the reporting period: An event, which could be favorable or unfavorable, that occurs
between the reporting period and the date that the financial statements are authorized for issue.
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.
Non-adjusting event: An event after the reporting period that is indicative of a condition that arose
after the reporting period.
Adjusting event
Examples:

Events that indicate that the going

concern assumption in relation to the
whole or part of the entity is not
appropriate
Settlement after reporting date of
court cases that confirm the entity
had a present obligation at reporting
date

Bankruptcy of a customer that occurs

after reporting date that confirms a
loss existed at reporting date on
trade receivables

Sales of inventories after reporting

date that give evidence about their
net realisable value at reporting date

Determination after reporting date of

cost of assets purchased or proceeds
from assets sold, before reporting
date

Discovery of fraud or errors that show

the financial statements are incorrect.

Non-adjusting event
Examples:

Major business combinations or disposal

of a subsidiary

Major purchase or disposal of assets,

classification of assets as held for sale
or expropriation of major assets by
government

Destruction of a major production plant

by fire after reporting date

Announcing
operations

Announcing a major restructuring after

reporting date

Major ordinary share transactions

Abnormal large changes after the

reporting period in assets prices or
foreign exchange rates

Changes in tax rates or tax law

Entering into major commitments such

as guarantees

Commencing major litigation arising

solely out of events that occurred after
the reporting period.

plan

to

discontinue

Accounting
Adjust financial statements for adjusting events events after the reporting period 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.

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Do not adjust for non-adjusting events events or conditions that arose after the
reporting period.
If an entity declares dividends after the reporting period, the entity shall not recognize those
dividends as a liability at the reporting period. That is a non-adjusting event.
Going Concern Issues Arising After Reporting period
An entity shall 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 to cease trading,
or that it has no realistic alternative but to do so.
Disclosure

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 reporting
period to reflect any new information that it receives after the reporting period about those
conditions.

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.

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