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IFRS Inclusion in the reporting of non adjusting events

IFRS Inclusion in the reporting of non adjusting events

IFRS Inclusion in the reporting of non adjusting events:Sometimes the actuary may consider it appropriate, or the terms of the work may require the actuary, to report an alternative and opposite calculation; i.e., an alternative calculation that does not take the subsequent event into account when the main calculation does, or that takes the subsequent event into account when the main calculation does not. For example, in a province for which the calculation date for a pension valuation following marriage breakdown is the date of separation, a subsequent event may be the early retirement of the plan member at some time between the calculation date and the report date. The actuary would consider reporting values assuming that this subsequent event had been an established intention at the calculation date,

instead of or in addition to retirement scenarios otherwise recommended in the practice-specific standards. In such cases, the actuary would make the same calculations regardless of the purpose of the work but the reporting thereof would depend on the purpose of the work.

The objective of this Standard is to prescribe:

  1. when an entity should adjust its financial statements for events after the reporting period; and
  2. the disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period. The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the reporting period indicate that the going concern assumption is not appropriate.

IFRS Inclusion in the reporting of non adjusting events:

Overview

Usually, a period of time elapses between the balance sheet date and the date on which the financial statements are authorised for issue. This is the period during which the prepares are finalising the financial statements.

Events which occur during the period can be either adjusting or non-adjusting events.

Adjusting events are those that provide evidence of conditions that existed at the end of the reporting period.Examples include the bankruptcy of a customer that occurs after year end which confirms the non-recoverability of a trade receivable or determination after year end of the cost of assets purchased, or the proceeds from assets sold, before year end.

Non-adjusting events are those that are indicative of conditions that arose after the reporting period.For example, announcing a plan to discontinue an operation after the year end, or the decline in market value of investments after year end.These events do not relate to the condition at the end of the reporting period, but reflects circumstances that have arisen subsequently.

IFRS Inclusion in the reporting of non adjusting events:

Recognition and measurement

IAS 10 requires an entity to adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period.For instance, the settlement after the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period. The bankruptcy of a customer who owed a debt to the entity at the balance sheet date usually confirms the loss of the debt. Sale of goods after the reporting period may also give evidence about their net realisable value at the balance sheet date.

IFRS Inclusion in the reporting of non adjusting events

IAS 10 Events after the Reporting Period as issued at 1 January 2012. Includes IFRSs with an effective date after 1 January 2012 but not the IFRSs they will replace. This extract has been prepared by IFRS Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. The objective of this Standard is to prescribe:

  1. When an entity should adjust its financial statements for events after the reporting period; and
  2. The disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period.

IFRS Inclusion in the reporting of non adjusting events: The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the reporting period indicate that the going concern assumption is not appropriate. 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. Two types of events can be identified:

  1. Those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and
  2. Those that are indicative of conditions that arose after the reporting period. An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period.

IFRS Inclusion in the reporting of non adjusting events: An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. If non-adjusting events after the reporting period are material, non-disclosure could influence the economic decisions of users taken on the basis of the financial statements. Accordingly, an entity shall disclose the following for each material category of non-adjusting event after the reporting period:

  1. The nature of the event
  2. An estimate of its financial effect, or a statement that such an estimate cannot be made. 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.

IFRS Inclusion in the reporting of non adjusting events

History of IAS 10

July 1977Exposure Draft E10 Contingencies and Events Occurring After the Balance Sheet Date
October 1978IAS 10 Contingencies and Events Occurring After the Balance Sheet Date effective 1 January 1980
1994IAS 10 (1978) was reformatted
August 1997Exposure Draft E59 Provisions, Contingent Liabilities and Contingent Assets
September 1998IAS 37 Provisions, Contingent Liabilities and Contingent Assets
1 July 1999Effective date of IAS 37, which superseded those portions of IAS 10 (1978) dealing with contingencies
November 1998Exposure Draft E63 Events After the Balance Sheet Date
May 1999IAS 10 (1999) Events After the Balance Sheet Date superseded those portions of IAS 10 (1978) dealing with events after the balance sheet date
1 January 2000Effective date of IAS 10 (1999)
18 December 2003Revised version of IAS 10 issued by the IASB
1 January 2005Effective date of IAS 10 (Revised 2003)
6 September 2007Retitled Events after the Reporting Period as a consequential amendment resulting from revisions to IAS 1

IFRS Inclusion in the reporting of non adjusting events

If an entity’s management decides after the reporting period to liquidate the entity or to cease trading, or that it has no alternative but to do so—the entity is no longer a going concern—IAS 16 considers this effect so pervasive that a fundamental change in basis of accounting would be required. In such instances, an entity shall not prepare its financial statements on a going concern basis.

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