CMA Intermediate · Corporate Accounting and Auditing

Events after the Reporting Period (Ind AS 10): formula sheet

Full chapter guide

Key formulas

Window of events after the reporting period: End of reporting period → Date of approval of financial statements for issue; Both favourable and unfavourable events in this window are covered.
Adjusting event: Evidence of conditions existing at the end of the reporting period → adjust recognised amounts; Para 8: the entity shall adjust the amounts recognised.
Non-adjusting event: Condition arose after the reporting period → do not adjust; disclose if material; Para 10 prohibits adjustment. Para 21 requires nature of event and estimate of financial effect, or a statement that no estimate can be made.
Approval date disclosure: Disclose: date of approval for issue + who gave approval; Para 17. Also disclose if owners or others can amend the statements after issue.
Period covered: Reporting date → date financial statements are authorised for issue; Only events in this window are considered under Ind AS 10.
Adjusting event test: Evidence of a condition existing at the reporting date → adjust recognised amounts; If the condition arose after the reporting date, it is non-adjusting.
Court case: Settlement after the period confirming an existing obligation → adjust provision, or recognise a liability if none was made; Adjust to the settled amount. Do not just disclose.
Insolvent debtor: Bad debt = balance outstanding − amount expected to be recovered; Adjust the loss in the year ended on the reporting date. Reduce receivables and charge the loss to profit or loss.
Going concern override: Deterioration after the period indicating no going concern → do not prepare on going concern basis; This applies even if the event is not otherwise adjusting. It is covered under Dividends and Going Concern after the Reporting Period.
Rule for non-adjusting events: Non-adjusting event → no change to recognised amounts; disclose if material; Ind AS 10 para 10 says an entity shall not adjust amounts for non-adjusting events.
Disclosure required (para 21): Nature of the event + estimate of financial effect (or statement that it cannot be estimated); Required for each material category of non-adjusting event.
Definition test: Adjusting = evidence of conditions existing at reporting date; Non-adjusting = conditions arising after reporting date; The window runs from the end of the reporting period to the date the financial statements are approved for issue.
Examples in para 22: Major business combination or disposal of a major subsidiary; plan to discontinue an operation; major asset purchases, held-for-sale classification, disposals or expropriation; destruction of a major plant by fire; major restructuring; major share transactions; abnormally large changes in asset prices or exchange rates; tax rate or law changes; significant commitments or guarantees; major litigation arising solely from later events; These generally result in disclosure. The list is of examples, not exhaustive.
Share transactions exception: Bonus issues, share splits and reverse splits after the period are adjusted under Ind AS 33, not treated as ordinary non-adjusting disclosures; Para 22(f) excludes them because Ind AS 33 requires adjustment (EPS).
Dividend declared after the reporting period: Declared after period end → no liability at reporting date; disclose in notes; Paragraphs 12 and 13. Applies to dividends to holders of equity instruments, declared before the financial statements are approved for issue.
Dividend declared on or before the reporting date: Declared (and authorised) by reporting date → liability recognised; A present obligation exists, so it is not covered by the rule above. Use the date of authorisation to decide.
Going concern test: Intention to liquidate or cease trading, or no realistic alternative → not a going concern basis; Paragraph 14. Management's determination after the reporting period is enough.
Effect of failing going concern: Change in the basis of accounting, not adjustment of amounts; Paragraph 15. Do not just write down a few assets and carry on.
Going concern disclosures: Not going concern basis, or material uncertainty → disclose as per Ind AS 1; Paragraph 16. Applies even where the uncertainty arises after the reporting period.

Quick revision

Window: from the end of the reporting period to the date the financial statements are approved for issue.
Adjusting events give evidence of conditions that existed at the end of the reporting period.
Non-adjusting events indicate conditions that arose after the reporting period.
Adjust recognised amounts for adjusting events; do not adjust for non-adjusting events.
Court case settled after the period, confirming a present obligation at the period end, is an adjusting event.
Bankruptcy of a customer after the period, confirming a receivable was already impaired, is adjusting.
A fall in market value of investments after the period is non-adjusting, as it reflects later market changes.
Disclose for material non-adjusting events: nature and estimate of financial effect, or that no estimate can be made.
Dividends declared after the reporting period are not recognised as a liability at that date.
If management decides after the period to liquidate or cease trading, do not use the going concern basis.
Always check whether an event is material before deciding on disclosure.
Read the approval date in the question carefully, because events after it are outside the standard.

Common mistakes

Treating the date of the auditor's report or the AGM as the end of the window. Fix: The window ends on the date the Board (or corresponding authority) approves the statements for issue.
Thinking only unfavourable events are covered. Fix: The definition covers events, favourable and unfavourable.
Treating every unfavourable event after the reporting date as adjusting. Fix: Apply the condition test. A fire or a flood after the date is non-adjusting, however large the loss.
Adjusting for the full amount of a court settlement instead of the difference from the existing provision. Fix: Extra charge = settled amount − provision already made. If no provision exists, charge the whole amount.
Adjusting the books for a fall in the market value of investments after year end. Fix: The fall reflects later circumstances. Do not adjust or update the reporting-date amounts. Disclose if material.
Classifying by the date of the event instead of the date of the condition. Fix: Ask when the cause arose. Customer bankruptcy confirms an earlier impairment, so it is adjusting. A later fire is a new condition.
Recognising a proposed dividend as a liability in the year the profit was earned. Fix: Under Ind AS 10, a dividend declared after the reporting period creates no liability at that date. Disclose it in the notes.
Treating a dividend declared after the reporting period as an adjusting event. Fix: No obligation existed at the reporting date, so the standard prohibits recognising it. Disclose only.

Exam tips

In MCQs, apply the 'did the condition exist at the reporting date' test before reading the options in detail.
Memorise the paragraph 9 adjusting examples and the paragraph 22 non-adjusting examples; questions often copy them.
In written answers, always give the reason for classification, not just the label. Step marks come from the reasoning.
Mention the window end date as the Board approval date, and add the paragraph 17 disclosure when asked about disclosures.
If the loan-breach rule appears, note it applies to periods before the omission from 1 April 2026 and read the question's period carefully.
Always write the reporting date and authorisation date at the top of your answer. It earns marks and prevents errors.
In written answers, give a reason for each classification in one line: condition existed or did not exist at the reporting date.
For MCQs, spot the cause. Insolvency, a settled case, fraud tied to earlier periods and a sale of inventory below cost after the period are usually adjusting. Fire, a new share issue, and a fall in the market value of investments or changes in exchange rates after the period are usually non-adjusting.