EVENTS AFTER THE END OF THE REPORTING PERIOD

Section 32

Events after the End of the Reporting Period

Scope of this section

32. 1 This section defines events after the end of the reporting period and sets out principles for recognising, measuring and disclosing those events.

Events after the end of the reporting period defined

32. 2 Events after the end of the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. There are two types of events:
    1. those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the end of the reporting period); and
    2. those that are indicative of conditions that arose after the end of the reporting period (non-adjusting events after the end of the reporting period).

32. 3 Events after the end of the reporting period include all events up to the date when the financial statements are authorised for issue, even if those events occur after the public announcement of profit or loss or other selected financial information.

Recognition and measurement

Adjusting events after the end of the reporting period

32. 4 An entity shall adjust the amounts recognised in its financial statements, including related disclosures, to reflect adjusting events after the end of the reporting period.

32. 5 The following are examples of adjusting events after the end of the reporting period that require an entity to adjust the amounts recognised in its financial statements, or to recognise items that were not previously recognised:
    1. the settlement after the end of the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period. The entity adjusts any previously recognised provision related to this court case in accordance with Section 21 Provisions and Contingencies or recognises a new provision. The entity does not merely disclose a contingent liability. Instead, the settlement provides additional evidence to be considered in determining the provision that should be recognised at the end of the reporting period in accordance with Section 21.
    2. the receipt of information after the end of the reporting period indicating that an asset was impaired at the end of the reporting period or that the amount of a previously recognised impairment loss for that asset needs to be adjusted. For example:
       1. the bankruptcy of a customer that occurs after the end of the reporting period usually confirms that a loss existed at the end of the reporting period on a trade receivable and that the entity needs to adjust the carrying amount of the trade receivable; and
       2. the sale of inventories after the end of the reporting period may give evidence about their selling price at the end of the reporting period for the purpose of assessing impairment at that date.
    3. the determination after the end of the reporting period of the cost of assets purchased, or the proceeds from assets sold, before the end of the reporting period.
    4. the determination after the end of the reporting period of the amount of profit-sharing or bonus payments, if the entity had a legal or constructive obligation at the end of the reporting period to make such payments as a result of events before that date (see Section 28 Employee Benefits).
    5. the discovery of fraud or errors that show that the financial statements are incorrect.

Non-adjusting events after the end of the reporting period

32. 6 An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the end of the reporting period.

32. 7 Examples of non-adjusting events after the end of the reporting period include:
    1. a decline in market value of investments between the end of the reporting period and the date when the financial statements are authorised for issue. The decline in market value does not normally relate to the condition of the investments at the end of the reporting period, but reflects circumstances that have arisen subsequently. Consequently, an entity does not adjust the amounts recognised in its financial statements for the investments. Similarly, the entity does not update the amounts disclosed for the investments as at the end of the reporting period, although it may need to give additional disclosure in accordance with paragraph 32.10.
    2. an amount that becomes receivable as a result of a favourable judgement or settlement of a court case after the reporting date but before the financial statements are authorised for issue. This would be a contingent asset at the reporting date (see paragraph 21.13) and disclosure may be required by paragraph 21.16. However, agreement on the amount of damages for a judgement that was reached before the reporting date, but was not previously recognised because the amount could not be measured reliably, may constitute an adjusting event.

Dividends

32. 8 If an entity declares dividends to holders of its equity instruments after the end of the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period. The amount of the dividend may be presented as a segregated component of retained earnings at the end of the reporting period.

Disclosure

Date of authorisation for issue

32. 9 An entity shall disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the entity’s owners or others have the power to amend the financial statements after issue, the entity shall disclose that fact.

Non-adjusting events after the end of the reporting period

32. 10 An entity shall disclose the following for each category of non-adjusting event after the end of the reporting period:
    1. the nature of the event; and
    2. an estimate of its financial effect or a statement that such an estimate cannot be made.

32. 11 The following are examples of non-adjusting events after the end of the reporting period that would generally result in disclosure; the disclosures will reflect information that becomes known after the end of the reporting period but before the financial statements are authorised for issue:
    1. a major business combination or disposal of a major subsidiary;
    2. announcement of a plan to discontinue an operation;
    3. major purchases of assets, disposals or plans to dispose of assets, or expropriation of major assets by government;
    4. the destruction of a major production plant by a fire;
    5. announcement, or commencement of the implementation, of a major restructuring;
    6. issues or repurchases of an entity’s debt or equity instruments;
    7. abnormally large changes in asset prices or foreign exchange rates;
    8. changes in tax rates or tax laws enacted or announced that have a significant effect on current and deferred tax assets and liabilities;
    9. entering into significant commitments or contingent liabilities, for example, by issuing significant guarantees; and
    10. commencement of major litigation arising solely out of events that occurred after the end of the reporting period.