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CA Final · Financial Reporting · Ind AS 10 Events after the Reporting Period

Aarav Infra Ltd has a reporting date of 31 March 2026 and its Board approves the financial statements on 10 June 2026. Which one of the following events occurring between these two dates is an adjusting event?

The discovery of the employee fraud that shows the 31 March 2026 figures were incorrect is the adjusting event. The other events arise from conditions after the reporting period and are non-adjusting, so they are only disclosed if material.

  1. AAnnouncement on 20 April 2026 of a plan to discontinue an operation
  2. BDiscovery on 5 May 2026 of a fraud by an employee that shows the 31 March 2026 figures were incorrectCorrect
  3. CCommencement on 15 May 2026 of major litigation arising solely out of an event that occurred in May 2026
  4. DEnactment on 2 June 2026 of a change in tax rates having a significant effect on deferred tax balances

Explanation

Discovery of fraud or errors that show the financial statements are incorrect is an adjusting event. The discontinuation plan, litigation arising solely from post-period events, and tax rate changes enacted after the period are all non-adjusting events requiring disclosure only.

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