IAS 10 events after the reporting period: what to fix, what to disclose, and what to leave alone

IAS 10 events after the reporting period are the surprises that land between the last day of the financial year and the day the accounts are signed off. A customer goes bust in January. A court case settles in February. Which of these change the numbers, and which just get a note? IAS 10 exists to answer exactly that question.

IAS 10 events after the reporting period: the one question that decides everything

IAS 10 events after the reporting period are judged by a single test: did the event give evidence of a condition that existed at the end of the reporting period? If yes, it is an adjusting event: change the amounts. If no — the condition arose after year-end — it is a non-adjusting event: leave the numbers alone.

The window runs from the end of the reporting period up to the date the financial statements are authorised for issue. Events after that date are outside the standard's scope, which is why the authorisation date itself must be disclosed, along with who gave it. In practice: your year-end numbers are not frozen the moment the year ends — they stay open to evidence until the statements are authorised, but only to evidence about conditions that already existed.

IAS 10 events after the reporting period: adjusting events

Adjusting events prove something about the position at year-end:

• A customer goes bankrupt after year-end. If they owed you money at the balance sheet date, the bankruptcy usually confirms the debt was already unrecoverable — adjust the receivable and the profit.
• A court case settles after year-end. If the settlement confirms you had a present obligation at year-end, adjust the provision to the settled amount instead of the estimate you carried.
• Inventory sells after year-end at a lower price. That sale can be evidence of the stock's net realisable value at year-end — the same lower-of-cost-and-NRV test in IAS 2 — so write the stock down in the year just ended.
• Fraud or an error is discovered after year-end. If it shows the statements were wrong, the correction belongs in those statements. The pattern is always the same: the event did not create the condition, it revealed it.

Non-adjusting events: disclose, don't restate

Non-adjusting events are conditions that arose after the reporting period. They do not change the numbers, because the numbers describe the position at year-end. Typical examples: a major plant destroyed by fire after year-end; a plan to discontinue an operation, or a major restructuring, announced after year-end; the market value of your investments falling after year-end; or buying or selling a major asset — or a whole subsidiary — after year-end.

If such an event is material, IAS 10 requires disclosure: the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be made.

Two rules catch small businesses out. First, dividends declared after the reporting period are not a liability at year-end, because no obligation existed at that date — disclose them, don't provide for them. Second, the same test applies across your whole balance sheet: if a leased shop is damaged by fire after year-end, IFRS 16 Leases still measures the lease liability as it stood at year-end; the fire is a disclosure, not an adjustment.

The going-concern exception

One post-year-end decision overrides everything else. If, after the reporting period, management decides to liquidate the business or cease trading — or concludes it has no realistic alternative — the financial statements must not be prepared on a going concern basis. That is not a tweak to a number; it is a change to the entire basis of the accounts. Discuss it with your accountant before the statements are authorised, not after.

A small-business checklist for year-end

1. Fix your authorisation date in advance. Know who authorises the statements and when — everything between year-end and that date is in scope.
2. Ask the one question for every surprise. Did it reveal something already true at year-end, or create something new? Adjust for the first, disclose for the second.
3. Chase the evidence, not the rumour. A bankruptcy filing, a signed settlement, a post-year-end sale price — documents decide, not hunches.
4. Disclose material non-adjusting events properly. Nature of the event, estimated financial effect, or an honest statement that you cannot estimate it yet.
5. Check dividends and shutdown decisions separately. Dividends declared after year-end are a disclosure, not a liability; a decision to close changes the whole basis of the accounts.

IAS 10 events after the reporting period are not about perfection. They are about honesty: the numbers should show the position as it was at year-end, with the benefit of what you learned before signing them off — and the notes should tell the reader what changed afterwards.

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