Intro: this Study Guide discusses the situations when transactions occurring after the

reporting period are to be recognised or disclosed in the Financial Statements (FS). Similarly,
it also covers the accounting rules about provisions and contingent liabilities / assets.

Event after the reporting period

Next financial year Date of authorisation

depends upon

End of the Events falling in this period Date of

Management structure
reporting are events after end of the authorisation
period reporting period for issue Statutory requirements
Procedure followed in preparing FS

For a registered company The date on which the board authorises FS

Dates of
authorisation
for issue When required to issue FS to Date on which the management authorises
a supervisory board them for issue to the supervisory board

Events after Reporting Period, Contingent Liabilities & Assets B4.1

 Elements of Financial Statements B4.2

Adjusting and non-adjusting events reported in the financial statements

IAS 10 requires
the following
Events after the
disclosures for
reporting period
non adjusting
events

Adjusting Non-adjusting
events events
¾The nature of the
event i.e. what
If no longer a
has happened
going concern-
Conditions exist at requires a Conditions arise ¾An estimate of its
the end of the fundamental after the reporting financial effect
reporting period change in the period (amount of loss)
basis of
or a statement
accounting
that such an
rather than
Necessitate Do not necessitate estimate cannot
just an
adjustments to the adjustments to the be made.
adjustment to
figures in FS figures in the FS
the values.
 Conclusion of court case confirming
obligation at the end of the reporting period Amount of a previously
recognised impairment
Receipt of information after the reporting loss for an asset needs
IAS 10 lists period indicating that: to be adjusted
circumstance
Determination, after the reporting period, of
s requiring the cost of assets purchased, or the An asset was impaired
adjustments proceeds from assets sold, before the end at the end of the
of the reporting period
reporting period
Discovery of fraud or errors that show that
the financial statements are incorrect
“Provision"," Contingent asset” & “Contingent liability”
Contingent liabilities: Present or possible obligation, occurrence
Provisions: are liabilities of or amount of which is contingent on occurrence / non-occurrence
uncertain timing or amount of uncertain future event(s).
Provision Contingent liability Contingent asset
Exist when probably requires may not require an economic benefits are
Present obligation an outflow of outflow of resources probable but not virtually
resources certain
Recognised in FS Provision is No provision is No asset is recognised
recognised recognised
Disclosures in FS required required required

Events after Reporting Period, Contingent Liabilities & Assets B4.3

 Elements of Financial Statements B4.4

Determination of contingent liability

Start

Yes Does present obligation No

exist?

Yes
Is the liability Is amount of liability Does obligation depend
determinable? measurable reliably? upon occurrence/ non-
occurrence of uncertain
events
No
No Yes
No Yes
Contingent
Firm liability
liability
Contingent
No liability
liability