Strategic Business Reporting (International) · Provisions, contingencies and events after the reporting period

IAS 10 Events After the Reporting Period: Adjusting and Non-Adjusting Events

Updated 11 October 2026 · Fact-checked

IAS 10 deals with events between the reporting date and the date the financial statements are authorised for issue. Adjusting events give evidence of conditions that existed at the reporting date, so you change the figures. Non-adjusting events arise afterwards, so you only disclose them if material. Dividends declared after the reporting date are not recognised as a liability at the reporting date.

Understand IAS 10 Events After the Reporting Period

A set of financial statements describes the position at the reporting date. But they are signed off weeks or months later. IAS 10 tells you what to do with news that arrives in that gap.

The gap is called the period after the reporting period. It runs from the reporting date to the date the financial statements are authorised for issue. That is usually when the board approves them. If shareholders must approve afterwards, the board date still counts for this purpose.

The key test is simple. Does the new event give you more evidence about a condition that already existed at the reporting date? If yes, it is an adjusting event and you change the recognised amounts. If the event relates to conditions that arose after the reporting date, it is a non-adjusting event. You do not change the numbers. You disclose the nature of the event and an estimate of its financial effect, if it is material enough to influence users' decisions.

Dividends are a special case. If an entity declares dividends to equity holders after the reporting date, it does not recognise a liability at the reporting date. There was no obligation then. You disclose the dividend in the notes instead.

Going concern is the exception that overrides the others. If, after the reporting date, management determines that it intends to liquidate the entity or cease trading, or has no realistic alternative but to do so, the financial statements are no longer prepared on a going concern basis. A deterioration in operating results and financial position after the reporting date may also indicate that the going concern assumption is no longer appropriate. It is a fundamental change in basis, not just a disclosure point.

Key rules to remember

Adjusting event test: Evidence of a condition existing at the reporting date → adjust recognised amounts; Applies to events up to the date the financial statements are authorised for issue.
Non-adjusting event test: Condition arose after the reporting date → no adjustment; disclose nature and estimate of financial effect if material; If an estimate cannot be made, state that fact.
Dividends declared after the reporting date: No liability at the reporting date → disclose only; The obligation does not exist until the dividend is declared.
Going concern override: After the reporting date, management intends to liquidate or cease trading, or has no realistic alternative → do not prepare on a going concern basis; A deterioration in operating results and financial position after the reporting date may also indicate that the going concern assumption is no longer appropriate.
Authorisation date disclosure: Disclose the date the financial statements were authorised for issue and who gave that authorisation; Users then know that events after that date are not reflected.

How to solve IAS 10 Events After the Reporting Period questions

Use this method for any IAS 10 scenario. Write your answer in the order of the steps so the marker can follow it.

1Identify the reporting date and the date the financial statements are authorised for issue. Check the event falls between them.
2State what the event is and what it tells you. Ask whether the condition existed at the reporting date.
3Classify it as adjusting or non-adjusting and give a one-line reason tied to the scenario.
4If adjusting, say which asset, liability, income or expense changes and calculate the amount. Consider tax effects if the question asks.
5If non-adjusting, state the disclosure: nature of the event and estimate of financial effect, if material.
6Check for dividends and say no liability is recognised at the reporting date.
7Consider going concern. If the event threatens the business, discuss whether the going concern basis is still appropriate and what disclosure is needed.
8Add the professional skills point: comment on materiality, management's incentives to delay or hide events, and the auditor's or accountant's response.

Quickest way: Date and evidence test

When to use it: Use this when you have a list of short events and little time, such as a multi-part scenario in Section B.

Mark the two dates on the scenario: reporting date and authorisation date.
Ignore anything outside the window.
For each event ask: was the cause already there at the reporting date?
Cause already there: adjusting. Cause new: non-adjusting.
Write the treatment in one line each: change figures, or disclose.
Scan once for a dividend or a going concern threat.

Common mistakes in IAS 10 Events After the Reporting Period

Recording a dividend declared after the reporting date as a liability.
Students link dividends with profit for the year and assume the liability belongs to that year.
Fix: A liability needs a present obligation at the reporting date. No declaration means no obligation. Disclose only.
Treating a fall in the market value of investments after the reporting date as adjusting.
Students see a loss and want to recognise it quickly.
Fix: Market movements after the reporting date reflect new conditions. They are non-adjusting. Disclose if material.
Treating a customer's bankruptcy after year end as non-adjusting.
The bankruptcy happens after the date, so it looks like a new event.
Fix: Ask what it proves. It usually confirms the customer was already in difficulty at the reporting date, so the receivable is impaired. Adjust.
Using the wrong end date for the window.
Students stop at the shareholders' meeting or at the audit report date.
Fix: The window ends when the financial statements are authorised for issue, normally the board approval date.
Ignoring going concern when a major event occurs after year end.
Students focus on adjusting versus non-adjusting and stop there.
Fix: For events such as a major fire, loss of a key customer or a decision to cease trading, always consider whether the going concern basis is still appropriate.
Writing only 'disclose' without saying what to disclose.
Students memorise the label and skip the content.
Fix: State the nature of the event and an estimate of its financial effect, or a statement that an estimate cannot be made.

Worked examples

Example 1

Aster has a reporting date of 31 December 20X5. The board authorised the financial statements on 15 March 20X6. Receivables include $80,000 due from Boran. On 20 February 20X6, Boran went into liquidation and Aster expects to recover nothing. Boran's financial difficulties had been growing through 20X5. On 10 March 20X6, Aster's board declared a dividend of $50,000 for the year ended 31 December 20X5. Explain the treatment of both items.

Show the solution

Both events fall between 31 December 20X5 and 15 March 20X6, so IAS 10 applies.
Boran's liquidation: the difficulties existed at the reporting date. The liquidation gives evidence that the receivable was impaired then. It is an adjusting event.
Adjust: write off the $80,000 receivable as an irrecoverable debt expense in the year ended 31 December 20X5. Adjust any related tax if relevant.
Dividend: it was declared after the reporting date, so no obligation existed at 31 December 20X5.
Do not recognise a liability. Disclose the $50,000 dividend in the notes as a non-adjusting item.
Professional skills: management may prefer not to adjust, as the write-off lowers profit. Explain that the evidence is clear and the adjustment is required.

Answer: The Boran liquidation is adjusting: write off $80,000 in the year to 31 December 20X5. The $50,000 dividend is non-adjusting: no liability, disclosure only.

Example 2

Cormac's reporting date is 30 June 20X6 and the financial statements were authorised on 5 September 20X6. On 12 July 20X6 a warehouse holding inventory was destroyed by fire. The inventory was carried at $400,000 and insurance covers 25% of it. Separately, on 20 August 20X6 Cormac's board decided to cease trading entirely and sell off its assets. Explain the treatment of each item.

Show the solution

Both events occur within the window, so IAS 10 applies.
Fire: the warehouse and inventory existed and were intact at 30 June 20X6. The fire is a new condition. It is non-adjusting, so the fire itself does not lead you to write the inventory down.
Disclose the nature of the fire and the estimated financial effect if material. The gross loss is $400,000. Insurance covers 25% × $400,000 = $100,000, so the estimated financial effect after insurance is $300,000, subject to any further recoveries.
Cessation: the board decision to cease trading is after the reporting date. IAS 10 requires a change of basis where management determines after the reporting date that it intends to cease trading, so the going concern basis is no longer appropriate.
Because the going concern basis is withdrawn, the whole set of financial statements, including inventory, is prepared on a break-up or other appropriate basis. It is not a normal going concern close with a fire note added.
On that basis, assets are measured at the amounts expected to be realised and liabilities may include closure costs. Disclose the basis used and the reason. The fire disclosure of $300,000 still stands as a separate non-adjusting item.

Answer: The fire is non-adjusting: disclose its nature and an estimated financial effect of $300,000 after insurance of $100,000. The decision to cease trading means the whole set of financial statements, including inventory, must be prepared on a break-up or other appropriate basis, and that basis and the reason must be disclosed.

Exam tips

Always give the reason for your classification. A bare label earns few marks.
Underline both dates in the scenario first. Many questions plant an event just outside the window.
For adjusting events, show the number and the line item that changes. For non-adjusting events, name the disclosure content.
Use the professional skills marks: comment on management bias, materiality and what an accountant or auditor should do if management resists adjustment.
Link IAS 10 to IAS 37 and IAS 1. Court cases, customer insolvency and going concern often sit across these standards.

Practice questions from Provisions, contingencies and events after the reporting period

IAS 10 Events After the Reporting Period in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

IAS 10 Events After the Reporting Period: frequently asked questions

What is the difference between adjusting and non-adjusting events?

An adjusting event provides evidence of a condition that existed at the reporting date, so you change the recognised amounts. A non-adjusting event relates to conditions that arose after the reporting date, so you only disclose it if material.

How do I treat dividends declared after the year end under IAS 10?

You do not recognise a liability at the reporting date, because no obligation existed then. You disclose the dividend in the notes. The liability appears in the period in which the dividend is declared.

What does IAS 10 say about going concern after the reporting date?

If management determines after the reporting date that it intends to liquidate the entity or cease trading, or has no realistic alternative but to do so, the financial statements must not be prepared on a going concern basis. A deterioration in operating results and financial position after the reporting date may also indicate that the going concern assumption is no longer appropriate.

Until when do events after the reporting period count?

They count until the date the financial statements are authorised for issue, normally when the board approves them. Events after that date are outside IAS 10, and the entity discloses the authorisation date.