IAS 10 – Events After the Reporting Period

Image: Reviewing post-year-end events under IAS 10 for Ghanaian companies

Introduction

Financial statements summarise activities and events that occurred within a specific accounting period. However, after that period ends, new events may arise that could influence users’ understanding of an entity’s financial position. IAS 10 – Events After the Reporting Period explains how to treat such occurrences and whether adjustments or disclosures are required.

According to IAS 10, these events must happen between the end of the reporting period and the date the financial statements are authorised for issue—usually a few months later, when the Board of Directors approves the accounts for publication.

Objective of IAS 10

• To specify when entities should adjust their financial statements for events after the reporting period.
• To require disclosures of such events and the date the financial statements were authorised for issue.

Definition

Events after the reporting period are those favourable or unfavourable events that occur between the end of the reporting period and the date when the financial statements are authorised for issue by management or the board.

Types of Events

• Adjusting events
• Non-adjusting events

1. Adjusting Events

These are events that provide additional evidence of conditions that already existed at the end of the reporting period. They help refine the measurement of assets and liabilities as of that date.

Examples of Adjusting Events (GHS figures)

• Settlement of a lawsuit: Adom Textiles Ltd. was defending a legal claim as of 31 December 2024. In February 2025, the court ruled and required payment of GHS 120,000. Since the obligation existed at year-end, the company must adjust its provisions to GHS 120,000.
• Discovery of fraud: Errors found in January 2025 relate to over-recorded sales in 2024. These must be corrected in the 2024 accounts.
• Inventory valuation: If goods in stock at 31 December 2024 were later found to be damaged before year-end, the value must be reduced accordingly.
• Receivables default: On 10 January 2025, a major debtor owing GHS 85,000 declares bankruptcy. Evidence shows the debtor was already in financial distress before year-end. The allowance for doubtful debts should therefore be increased.
• Final purchase cost confirmation: Supplier invoices received in January 2025 confirm the actual cost of machinery purchased in December 2024.

2. Non-Adjusting Events

Non-adjusting events are those that indicate conditions that arose after the reporting period. They do not affect figures in the financial statements but must be disclosed in the notes if they are material.

Examples of Non-Adjusting Events (GHS figures)

• Natural disaster: On 20 January 2025, a flood damages Kumasi Mining Co.’s warehouse. The warehouse was fully functional at 31 December 2024, so this is a non-adjusting event. The company should disclose the estimated loss of GHS 500,000 in the notes.
• New legal case: A lawsuit filed in February 2025 for a defective product sold in January 2025 does not relate to the prior year and is non-adjusting.
• Share issue: Adom Textiles Ltd. issued 100,000 ordinary shares at GHS 2 each in March 2025. This must be disclosed but not adjusted.
• Exchange rate fluctuations: Significant cedi-to-dollar movements after year-end affect future transactions only.
• Business closure: Decision to close the Tema factory made in February 2025 is a non-adjusting event but material, so it should be disclosed.

Recognition and Measurement

Entities must adjust the financial statements for adjusting events that provide evidence of conditions existing at the reporting date. Non-adjusting events are disclosed only if material, without changing the recognised amounts.

Worked Example

Scenario: Kumasi Electronics Ltd. had a customer owing GHS 100,000 as at 31 December 2024. On 15 January 2025, the customer was declared bankrupt. Evidence shows financial troubles already existed in December 2024.

Analysis: This event confirms a condition that existed at year-end, so it is an adjusting event. The receivable should be written off or an allowance for expected credit loss of GHS 100,000 recognised in the 2024 financial statements.

Dividends Declared After Reporting Period

Dividends declared to shareholders after the reporting period but before the financial statements are authorised for issue must not be recognised as liabilities at year-end. Instead, they are disclosed in the notes to the financial statements.

Example: Adom Textiles Ltd. declared a dividend of GHS 0.50 per share on 15 February 2025, after the 31 December 2024 reporting date. This is a non-adjusting event and should be disclosed but not recognised as a liability.

Going Concern Assessment

If, after the reporting period, management decides to liquidate the entity or cease trading, or it has no realistic alternative but to do so, the financial statements must not be prepared on a going concern basis.

Disclosure Requirements

• Date of Authorisation for Issue: Disclose the date and who authorised the financial statements for issue (e.g., the Board of Directors).
• Material Non-Adjusting Events: Describe the nature of the event and an estimate of its financial effect in cedis if practicable.
• Power to Amend: If owners or regulators can amend the financial statements after issue, that fact must be disclosed.

Why IAS 10 Matters for ICAG Students

IAS 10 is tested frequently in ICAG Financial Reporting and Corporate Reporting papers. Candidates must be able to distinguish between adjusting and non-adjusting events, apply the correct recognition treatment, and draft clear note disclosures.

Practice Questions

Internal Links

• IAS 1 – Presentation of Financial Statements
• IAS 7 – Statement of Cash Flows
• IAS 8 – Accounting Policies, Changes in Estimates and Errors

Outbound Link

For official guidance, see the IAS 10 Standard on the IFRS Foundation website.

Meta Description

Learn IAS 10 – Events After the Reporting Period with Ghanaian examples in GHS. Covers adjusting and non-adjusting events, dividends, and disclosures for ICAG Financial Reporting students.

Excerpt

This post explains IAS 10 with Ghana-based examples in cedis, showing how to treat adjusting and non-adjusting events after the reporting period, plus exam-style practice questions for ICAG students.