Chapter 4 : Dual Dating

‘Dual dating’ of financial statements – applying IAS 10 when previously issued financial statements are reissued in connection with an offering document

The question of dual dating of financial statements has been considered by the IFRS Interpretations Committee and is discussed in the May 2013 IFRIC Update. Specifically, the Interpretations Committee was asked to clarify the accounting implications of applying IAS 10 when previously issued financial statements are reissued in connection with an offering document.

“The question arises in jurisdictions in which securities laws and regulatory practices require an entity to reissue its previously issued annual financial statements in connection with an offering document, when the most recently filed interim financial statements reflect matters that are accounted for retrospectively under the applicable accounting standards.”

In these jurisdictions, securities laws and regulatory practices do not require or permit the entity, in its reissued financial statements, to recognise events or transactions that occur between the time the financial statements were first authorised for issue and the time the financial statements are reissued, unless the adjustment is required by national regulation; instead, securities laws and regulatory practices require the entity to recognise in its reissued financial statements only those adjustments that would ordinarily be made to the comparatives in the following year’s financial statements.

These adjustments would include, for example, adjustments for changes in accounting policy that are applied retrospectively but would not include changes in accounting estimates.

The submitter asked the Interpretations Committee to clarify whether IAS 10 permits only one date of authorisation for issue (i.e., ‘dual dating’ is not permitted) when considered within the context of reissuing previously issued financial statements in connection with an offering document.

The Interpretations Committee noted the following:

• that the scope of IAS 10 is the accounting for, and disclosure of, events after the reporting period and that the objective of this Standard is to prescribe (1) when an entity should adjust its financial statements for events after the reporting period, and (2) the disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period;
• that financial statements prepared in accordance with IAS 10 should reflect all adjusting and non-adjusting events up to the date that the financial statements are authorised for issue; and
• that IAS 10 does not address the presentation of reissued financial statements in an offering document when the originally issued financial statements have not been withdrawn, but the reissued financial statements are provided either as supplementary information or a re-presentation of the original financial statements in an offering document in accordance with regulatory requirements.

On the basis of the above, and because the question arises in multiple jurisdictions, each with particular securities laws and regulations which may dictate the form for re-presentations of financial statements, the Interpretations Committee decided not to add this issue to its agenda.

Dual Dating – Example On 1 August 20X0, the directors of Entity X authorise its financial statements for the year ended 30 June 20X0 to be issued to its shareholders. The financial statements are due to be filed with a regulator on 1 September 20X0. On 20 August 20X0, an event occurs that would have been classified as a non-adjusting event after the reporting period, if the event had occurred before the financial statements were authorised for issue. The directors of Entity X would like to amend (via disclosure) the financial statements that are to be filed with the regulator. They would like to use a ‘dual dating’ procedure whereby the authorisation date for the financial statements in general would be disclosed as 1 August 20X0, but the specific note containing the updated disclosures would be described as authorised at 20 August 20X0. Entity X is not permitted to dual date its financial statements as described for the purpose of incorporating a subsequent event at a date later than the original date of authorisation of the financial statements. The date of authorisation for financial statements in IAS 10 refers to the financial statements as a whole; there is no provision for different components of the financial statements to be authorised for issue at different dates.

What is the date of “authorization” for the amended financial statements ?

The question as to whether and how an entity is entitled to amend its financial statements after they have been authorized for issue is not addressed in IFRS Standards. Such matters will generally be dealt with in local laws or regulations. However, if under local laws or regulations an entity is entitled and wishes to amend its financial statements in such circumstances, the ‘date of authorization for issue’ under IAS 10 would be amended to the later date and it would apply to the financial statements as a whole.

As a result, the directors would be required to consider the impact of all material events occurring on or before the new date of authorization for issue in accordance with IAS 10.

Going concern

Management should assess the entity’s ability to continue as a going concern at the time of preparing the financial statements. This assessment must cover the entity’s prospects for at least 12 months from the balance sheet date.

An entity should not prepare its financial statements on the going concern basis if management determines, after the reporting period, that it:

a. intends to liquidate the entity or to cease trading; or

b. has no realistic alternative but to do so (even if the liquidation or cessation will occur more than 12 months after the balance sheet date).

There could be significant uncertainty about whether the going concern basis of accounting is appropriate. Such uncertainty might arise because of post balance sheet events. Where material uncertainties cast doubt on an entity’s ability to continue as a going concern, and its financial statements continue to be prepared on the going concern basis, full disclosure of the uncertainties is required.