Did you know that certain events occurring after the reporting date may require adjustment to the financial statements?
Under IAS 10 “Events after the Reporting Period”, adjusting events are those that provide evidence of conditions that existed at the reporting date. Such events require entities to adjust the amounts recognized in their financial statements.
Examples may include:
- Settlement of a court case confirming an existing obligation at year-end
- Bankruptcy of a customer indicating receivables were impaired at the reporting date
- Discovery of fraud or errors in financial statements
- Receipt of information determining the net realizable value of inventory held at year-end
Failure to appropriately assess adjusting events may result in material misstatements and non-compliance with IFRS requirements.
Entities should establish robust year-end review procedures to identify and evaluate post-reporting period events before financial statements are authorized for issue.