PAS 10 EVENTS AFTER THE REPORTING PERIOD

PAS 10 prescribes the accounting for, and disclosures of, events after the reporting
period, including disclosures regarding the date when the financial statements were authorized
for issue.
Events after the Reporting Period
Events after the reporting period are “those events, favorable and unfavorable, that
occur between the end of the reporting period and the date when the financial statements are
authorized for issue.”
For example, Entity A’s reporting period ends on December 32, 20x1 and its financial
statements are authorized for issue on March 31, 20x2. Events after the reporting period are
those events that occur within January 1, 20x1 to March 31, 20x2.
 The date of authorization of the financial statements is the date when management
authorizes the financial statements for issue regardless of whether such authorization is
final or subject to further approval.
Two types of events after reporting period
1) Adjusting events after the reporting period – are the events that provide evidence
of conditions that existed at the end of the reporting period.
2) Non-adjusting events after the reporting period – are events that are indicative of
conditions that arose after the reporting period.
 Adjusting events after the reporting period
Adjusting events require adjustments of amounts in the financial statements. Example
of adjusting events:
a) The settlement after the reporting period of a court case that confirms that the entity
has a present obligation at the end of reporting period.
b) The receipt of information after the reporting period indicating that an asset was
impaired at the end of reporting period. For example:
i. The bankruptcy of a customer that occurs after the reporting period may
indicate that the carrying amount of a trade receivable at the end of reporting
period is impaired.
ii. The sale of inventories after the reporting period may give evidence to their net
realizable value at the end of reporting period.
c) The determination after the reporting period of the cost asset purchased, or the
proceeds from asset sold, before the end of reporting period.
d) The determination after the reporting period od the amount of profit-sharing or bonus
payments, if the entity had a present legal or constructive obligation at the end of
reporting period to make such payments.
e) The discovery of fraud or errors that indicate that the financial statements are incorrect.
 Non-adjusting events after the reporting period
Non-adjusting events do not require adjustments of amounts in the financial
statements. However, they are disclosed if they are material. Examples of non-adjusting events:
a) Changes in fair values, foreign exchange rates, interest rates or market prices after the
reporting period.
b) Casualty losses (e.g., fire, storm or earthquake) occurring after the reporting period but
before the financial statements were authorized for issue.
c) Litigation arising solely from events occurring after the reporting period.
d) Significant commitments or contingent liabilities entered after the reporting period.
e) Major ordinary share transactions and potential ordinary share transactions after the
reporting period.
 f) Major business combination after the reporting period.
g) Announcing or commencing the implementation of, a major restructuring after the
reporting period.
h) Announcing a plan to discontinue an operation after the reporting period.
i) Change in tax rate enacted after the reporting period.
j) Declaration of dividends after the reporting period.
Dividends
Dividends declared after the reporting period are not recognized as liability at the end of
reporting period because no present obligation exists at the end of the reporting period.
Going Concern
PAS 10 prohibits the preparation of financial statements on a going concern basis if
management determines after the reporting period either that it intends to liquidate the entity
or to cease trading, or that it has no realistic alternative but to do so.
 PAS 8 ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES
AND ERRORS
PAS 8 prescribes the criteria for selecting, applying and changing accounting policies and
the accounting and disclosure of changes in accounting policies, changes in accounting
estimates and correction of prior period errors. These are intended to enhance the relevance,
reliability and comparability of the entity’s financial statements.
Accounting Policies
Accounting Policies are “the specific principles, bases conventions, rules and practices
applied by an entity in preparing and presenting financial statements.”
When selecting and applying accounting policies, an entity shall refer to the hierarchy guidance
below.
 Hierarchy of reporting standards
i. PFRS
ii. Judgement
The foregoing means that, to account for a transaction, an entity refers to the PFRSs
first; in the absence of a PFRS that specifically deals with that transaction, management uses its
judgement in developing and applying an accounting policy that results in information that is
relevant and reliable. In making the judgement, management considers the applicability of the
references.
 The two types of accounting changes are change in accounting policy and change in
accounting estimate.
An accounting policy shall be changed only when it is required by PFRS or results in relevant and
more reliable information.

Scope of PAS 8 Description Accounting Effect of adjustment

treatment
1.) Change in  Change in a) Transitional  On the
accountin measurement provision. beginning
g policy basis. b) Retrospective balance of
application. retained
c) If earnings, if
retrospective accounted for
application is retrospectively
impracticable .
, prospective
application.
2.) Change in  Changes in the  Prospective  In profit or loss
accountin realization (or application. of current
g incurrence) of period or
estimates expected inflow current or
or outflow of future periods,
economic if the change
benefits from affects both.
assets or
liabilities.
3.) Correction  Misapplication of a) Retrospective  On the
of prior principles, restatement. beginning
period oversight or b) If balance of
error misinterpretatio retrospective retained
n of facts, and restatement earnings, if
mathematical is accounted for
mistakes. impracticable retrospectively
, prospective .
restatement.