Chapter 1 : Overview of IAS 10

IAS 10 Events after the Reporting Period prescribes when an entity should adjust its financial statements for events after the reporting period, and the disclosures that an entity should make about the date when the financial statements were authorized for issue and about events after the reporting period.

Date when financial statements are authorised for issue Although the date when financial statements are authorised for issue is not defined, IAS 10 gives some guidance on how the phrase should be interpreted. Scenario 1: Approval by shareholders When an entity is required to submit its financial statements to its shareholders for approval after the financial statements have been issued, the financial statements are nevertheless authorised for issue on the date of issue, not the date when shareholders approve the financial statements. Example: The management of an entity completes draft financial statements for the year to 31 December 20X1 on 28 February 20X2. On 18 March 20X2, the board of directors reviews the financial statements and authorizes them for issue. The entity announces its profit and selected other financial information on 19 March 20X2. The financial statements are made available to shareholders and others on 1 April 20X2. The shareholders approve the financial statements at their annual meeting on 15 May 20X2 and the approved financial statements are then filed with a regulatory body on 17 May 20X2. The financial statements are authorised for issue on 18 March 20X2 (date of board authorization for issue). In this example, the public announcement is after the financial statements have been authorised for issue. In some jurisdictions, an entity may be permitted or required to make a ‘preliminary announcement’ of selected financial information before the full financial statements are authorised for issue. For example, this may be necessary because the information is regarded as ‘price sensitive’ and must be announced without delay. In such circumstances, events after the public announcement must be considered when the board approves the full financial statements. It is, therefore, possible that the information in the full financial statements will differ from that in the earlier public announcement. Scenario 2: Approval by supervisory board When the management of an entity is required to issue its financial statements to a supervisory board (made up solely of non-executives) for approval, the financial statements are authorised for issue when the management authorizes them for issue to the supervisory board. Example: On 18 March 20X2, the management of an entity authorises financial statements for issue to its supervisory board. The supervisory board is made up solely of non-executives and may include representatives of employees and other outside interests. The supervisory board approves the financial statements on 26 March 20X2. The financial statements are made available to shareholders and others on 1 April 20X2. The shareholders approve the financial statements at their annual meeting on 15 May 20X2 and the financial statements are then filed with a regulatory body on 17 May 20X2. The financial statements are authorised for issue on 18 March 20X2 (date of management authorisation for issue to the supervisory board).