What happens when a major event occurs after year-end but before the financial statements are authorized for issue? ⏳📊

Welcome to the gray zone of accounting — governed by IAS 10.

This is where timing decides everything. Same event. Different classification. Completely different accounting outcome.

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What we cover in this episode:

• The Critical Timeline 🗓️

The window between:

👉 Reporting date (e.g., 31 December)

👉 Date of authorization for issue

Everything hinges on what existed at the reporting date — not what happened later.

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• Adjusting Events 🔎

These provide evidence of conditions that already existed at year-end.

Examples:

✔️ Court case settled confirming existing obligation ⚖️

✔️ Bankruptcy of a customer confirming receivable impairment 💸

✔️ Discovery of fraud that occurred before year-end 🚨

Result: You adjust the numbers.

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• Non-Adjusting Events 📰

These relate to new conditions arising after year-end.

Example:

🔥 Fire in January destroying a warehouse

📉 Market crash after reporting date

You don’t change December’s numbers — but you disclose if material.

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• Dividends 💰

Dividends declared after the reporting date?

Never recognized as a liability at year-end.

They didn’t exist as an obligation yet.

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• The Going Concern Exception ⚠️

If a post-year-end event indicates the company is no longer a going concern, you don’t just disclose — you reconsider the entire basis of preparation.

This is the one area where the rule becomes existential.

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• Disclosure Requirements 📘

For material non-adjusting events:

👉 Nature of the event

👉 Estimated financial effect (or statement that it cannot be estimated)

Transparency without rewriting history.

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🔥 A Pro-Tip for your SOCPA Prep

Classic trap: Inventory sold after year-end at a loss 🚨

If inventory is sold in January below its carrying amount, that sale provides evidence that Net Realizable Value (NRV) was already lower at the reporting date.

That makes it an adjusting event.

You must write down inventory under IAS 2.

Examiners love this because it tests whether you connect standards instead of studying them in isolation 🎯.

IAS 10 is not about memorizing examples.

It’s about asking one ruthless question:

Did this condition exist at the reporting date — yes or no?