INTERNATIONAL ACCOUNTING STANDARD 10 EVENTS AFTER THE REPORTING PERIOD | |
OBJECTIVE | 1 |
SCOPE | 2 |
DEFINITIONS | 3 |
RECOGNITION AND MEASUREMENT | 8 |
Adjusting events after the reporting period | 8 |
Non-adjusting events after the reporting period | 10 |
Dividends | 12 |
GOING CONCERN | 14 |
DISCLOSURE | 17 |
Date of authorisation for issue | 17 |
Updating disclosure about conditions at the end of the reporting period | 19 |
Non-adjusting events after the reporting period | 21 |
EFFECTIVE DATE | 23 |
WITHDRAWAL OF IAS 10 (REVISED 1999) | 24 |
APPENDIX | |
Amendments to other pronouncements | |
APPROVAL BY THE BOARD OF IAS 10 ISSUED IN DECEMBER 2003 | |
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
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BASIS FOR CONCLUSIONS |
International Accounting Standard 10 Events after the Reporting Period (IAS 10) is set out in paragraphs 1–24 and the Appendix. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 10 should be read in the context of its objective and the Basis for Conclusions, the Preface to IFRS Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance. [Refer:IAS 8 paragraphs 10–12]
1 | The objective of this Standard is to prescribe:
The Standard also requires that an entity should not prepare its financial statements on a going concern [Refer:paragraphs 14–16] basis if events after the reporting period [Refer:paragraph 3 (definition of events after the reporting period)] indicate that the going concern assumption [Refer:IAS 1 paragraphs 25 and 26] is not appropriate. |
2 | This Standard shall be applied in the accounting for, [Refer:paragraphs 8–16] and disclosure of, [Refer:paragraphs 17–22] events after the reporting period. |
3 | The following terms are used in this Standard with the meanings specified: Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue.E1 [Refer:paragraphs 4–6] Two types of events can be identified:
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E1 | [IFRIC® Update, May 2013, Agenda Decision, ‘IAS 10 Events after the Reporting Period—Reissuing previously issued Financial Statements’ The Interpretations Committee was asked to clarify the accounting implications of applying IAS 10 Events after the Reporting Period when previously issued financial statements are reissued in connection with an offering document. The issue arose in jurisdictions in which securities laws and regulatory practices require an entity to reissue its previously issued annual financial statements in connection with an offering document, when the most recently filed interim financial statements reflect matters that are accounted for retrospectively under the applicable accounting standards. In these jurisdictions, securities law and regulatory practices do not require or permit the entity, in its reissued financial statements, to recognise events or transactions that occur between the time the financial statements were first authorised for issued and the time the financial statements are reissued, unless the adjustment is required by national regulation; instead security and regulatory practices require the entity to recognise in its reissued financial statements only those adjustments that would ordinarily be made to the comparatives in the following year’s financial statements. These adjustments would include, for example, adjustments for changes in accounting policy that are applied retrospectively, but would not include changes in accounting estimates. This approach is called ‘dual dating’. The submitter asked the Interpretations Committee to clarify whether IAS 10 permits only one date of authorisation for issue (ie ‘dual dating’ is not permitted) when considered within the context of reissuing previously issued financial statements in connection with an offering document. The Interpretations Committee noted that the scope of IAS 10 is the accounting for, and disclosure of, events after the reporting period and that the objective of this Standard is to prescribe:
The Interpretations Committee also noted that financial statements prepared in accordance with IAS 10 should reflect all adjusting and non-adjusting events up to the date that the financial statements were authorised for issue. The Interpretations Committee noted that IAS 10 does not address the presentation of re-issued financial statements in an offering document when the originally issued financial statements have not been withdrawn, but the re-issued financial statements are provided either as supplementary information or a re-presentation of the original financial statements in an offering document in accordance with regulatory requirements. On the basis of the above and because the issue arises in multiple jurisdictions, each with particular securities laws and regulations which may dictate the form for re-presentations of financial statements, the Interpretations Committee decided not to add this issue to its agenda.] |
4 | The process involved in authorising the financial statements for issue will vary depending upon the management structure, statutory requirements and procedures followed in preparing and finalising the financial statements. |
5 | In some cases, an entity is required to submit its financial statements to its shareholders for approval after the financial statements have been issued. In such cases, the financial statements are authorised for issue on the date of issue, not the date when shareholders approve the financial statements.
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6 | In some cases, the management of an entity is required to issue its financial statements to a supervisory board (made up solely of non‑executives) for approval. In such cases, the financial statements are authorised for issue when the management authorises them for issue to the supervisory board.
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7 | Events after the reporting period include all events up to the date when the financial statements are authorised for issue, even if those events occur after the public announcement of profit or of other selected financial information. |
8 | An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period. [Refer:paragraph 3(a)] |
9 | The following are examples of adjusting events after the reporting period [Refer:paragraph 3(a)] that require an entity to adjust the amounts recognised in its financial statements, or to recognise items that were not previously recognised:
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10 | An entity shall not adjust the amounts recognised in its financial statements to reflect non‑adjusting events after the reporting period. [Refer:paragraph 3(b)] |
11 | An example of a non‑adjusting event after the reporting period [Refer:paragraph 3(b)] is a decline in fair value of investments between the end of the reporting period and the date when the financial statements are authorised for issue. [Refer:paragraphs 4–6] The decline in fair value does not normally relate to the condition of the investments at the end of the reporting period, but reflects circumstances that have arisen subsequently. Therefore, an entity does not adjust the amounts recognised in its financial statements for the investments. Similarly, the entity does not update the amounts disclosed for the investments as at the end of the reporting period, although it may need to give additional disclosure under paragraph 21. |
12 | If an entity declares dividends to holders of equity instruments (as defined in IAS 32 Financial Instruments: Presentation [Refer:IAS 32 paragraph 11 (definition of an equity instrument)]) after the reporting period, [Refer:paragraphs 4–6] the entity shall not recognise those dividends as a liability at the end of the reporting period. |
13 | If dividends are declared after the reporting period but before the financial statements are authorised for issue, [Refer:paragraphs 3–7] the dividends are not recognised as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with IAS 1 Presentation of Financial Statements. [Refer:IAS 1 paragraph 137]
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14 | An entity shall not prepare its financial statements on a going concern basis [Refer:IAS 1 paragraphs 25 and 26] 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.E2 |
E2 | [IFRIC® Update, June 2021, Agenda Decision, ‘IAS 10 Events after the Reporting Period—Preparation of Financial Statements when an Entity is No Longer a Going Concern’ The Committee received a request about the accounting applied by an entity that is no longer a going concern (as described in paragraph 25 of IAS 1 Presentation of Financial Statements). The request asked whether such an entity:
Question I Paragraph 25 of IAS 1 requires an entity to prepare financial statements on a going concern basis ‘unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so’. Paragraph 14 of IAS 10 states that ‘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’. Applying paragraph 25 of IAS 1 and paragraph 14 of IAS 10, an entity that is no longer a going concern cannot prepare financial statements (including those for prior periods that have not yet been authorised for issue) on a going concern basis. The Committee therefore concluded that the principles and requirements in IFRS Standards provide an adequate basis for an entity that is no longer a going concern to determine whether it prepares its financial statements on a going concern basis. Question II Based on its research, the Committee observed no diversity in the application of IFRS Standards with respect to Question II. Therefore, the Committee has not obtained evidence that the matter has widespread effect. For the reasons noted above, the Committee decided not to add a standard-setting project on these matters to the work plan.] |
15 | Deterioration in operating results [Refer:IAS 1 Basis for Conclusions paragraphs BC55 and BC56] and financial position after the reporting period may indicate a need to consider whether the going concern assumption [Refer:IAS 1 paragraph 25] is still appropriate. If the going concern assumption is no longer appropriate, the effect is so pervasive that this Standard requires a fundamental change in the basis of accounting, rather than an adjustment to the amounts recognised within the original basis of accounting. |
16 | IAS 1 specifies required disclosures if: [Refer:IAS 1 paragraph 25]
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17 | An entity shall disclose the date when the financial statements were authorised for issue [Refer:paragraphs 4–6] and who gave that authorisation. If the entity’s owners or others have the power to amend the financial statements after issue, the entity shall disclose that fact.
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18 | It is important for users to know when the financial statements were authorised for issue [Refer:paragraphs 4–6], because the financial statements do not reflect events after this date. |
19 | If an entity receives information after the reporting period about conditions that existed at the end of the reporting period, it shall update disclosures that relate to those conditions, in the light of the new information. |
20 | In some cases, an entity needs to update the disclosures in its financial statements to reflect information received after the reporting period, [Refer:paragraphs 3–7] even when the information does not affect the amounts that it recognises in its financial statements. One example of the need to update disclosures is when evidence becomes available after the reporting period about a contingent liability that existed at the end of the reporting period. In addition to considering whether it should recognise or change a provision under IAS 37, an entity updates its disclosures [Refer:IAS 37 paragraphs 86–92] about the contingent liability in the light of that evidence. |
21 | If non‑adjusting events after the reporting period [Refer:paragraph 3(b)] are material, [Refer:IAS 1 paragraphs 29–31] non‑disclosure could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. Accordingly, an entity shall disclose the following for each material category of non‑adjusting event after the reporting period:
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22 | The following are examples of non‑adjusting events after the reporting period [Refer:paragraph 3(b)] that would generally result in disclosure:
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23 | An entity shall apply this Standard for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. If an entity applies this Standard for a period beginning before 1 January 2005, it shall disclose that fact. |
23A | IFRS 13 Fair Value Measurement, issued in May 2011, amended paragraph 11. An entity shall apply that amendment when it applies IFRS 13. |
23B | IFRS 9 Financial Instruments, as issued in July 2014, amended paragraph 9. An entity shall apply that amendment when it applies IFRS 9. |
23C | Definition of Material (Amendments to IAS 1 and IAS 8), issued in October 2018, amended paragraph 21. An entity shall apply those amendments prospectively for annual periods beginning on or after 1 January 2020. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact. An entity shall apply those amendments when it applies the amendments to the definition of material in paragraph 7 of IAS 1 and paragraphs 5 and 6 of IAS 8. |
24 | This Standard supersedes IAS 10 Events After the Balance Sheet Date (revised in 1999). |
The amendments in this appendix shall be applied for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period.
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The amendments contained in this appendix when this Standard was revised in 2003 have been incorporated into the relevant IFRSs published in this volume.
International Accounting Standard 10 Events after the Balance Sheet Date (as revised in 2003) was approved for issue by the fourteen members of the International Accounting Standards Board.
Sir David Tweedie | Chairman |
Thomas E Jones | Vice-Chairman |
Mary E Barth | |
Hans-Georg Bruns | |
Anthony T Cope | |
Robert P Garnett | |
Gilbert Gélard | |
James J Leisenring | |
Warren J McGregor | |
Patricia L O’Malley | |
Harry K Schmid | |
John T Smith | |
Geoffrey Whittington | |
Tatsumi Yamada |