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| International Accounting standard(IAS) |
IAS-10 (International Accounting Standard 10) is a standard issued by the International Accounting Standards Board (IASB) that deals with events after the reporting period. It provides guidelines on how to account for events that occur after the end of the reporting period but before the financial statements are authorized for issue.
Key aspects of IAS 10 include:
1.Types of Events after the Reporting Period:
Adjusting Events:
These are events that provide additional information about conditions that existed at the end of the reporting period. If such events occur, the financial statements must be adjusted to reflect the new information. Examples include the discovery of errors or the settlement of a liability that existed at the reporting date.
Non-adjusting Events:
These are events that provide information about conditions that arose after the reporting period and do not require adjustments to the financial statements. However, if these events are material and could influence users' decisions, they should be disclosed in the notes. Examples include natural disasters or major changes in market conditions after the reporting period.
2.Authorization for Issue:
The financial statements should be adjusted for events after the reporting period up to the date when the statements are authorized for issue. This date is typically when the financial statements are approved by the board of directors or relevant governing body.
3.Disclosure of Non-adjusting Events:
Non-adjusting events should be disclosed in the notes to the financial statements if they are material and could affect the decisions of users. For instance, significant new contracts, acquisitions, or changes in asset values may be disclosed, even if they do not affect the financial position as of the reporting date.
4. Dividends:
If dividends are declared after the reporting period but before the financial statements are authorized for issue, they must be disclosed. However, they should not be recognized as a liability in the financial statements of the reporting period.
In short, IAS 10 ensures that financial statements reflect all material events that occur after the reporting period and before the approval of the financial statements, either through adjustments or disclosures, to provide accurate and relevant information to users.