Financial Accounting Practical
RELEVANT TO ACCA QUALIFICATION PAPER F8
Subsequent events
Students of financial reporting and auditing papers will have to gain an understanding of how subsequent events (also known as ‘events after the reporting period’) affect the financial statements of an entity. This article will consider the financial reporting aspects concerning subsequent events using a case study type scenario, and will then discuss the auditing requirements that candidates of Paper F8, Audit and Assurance need to be aware of.
Financial reporting considerations
In almost all circumstances, financial statements will not be finalised until a period of time has elapsed between the year-end date and the date on which the financial statements are (expected to be) issued. Therefore, regard has to be given to events that occur between the reporting date and the date on which the financial statements are (expected to be) authorised for issue.
IAS 10, Events After the Reporting Period stipulates the accounting and disclosure requirements concerning transactions and events that occur between the reporting date and the (expected) date of approval of the financial statements. Among other things, IAS 10 determines when an event that occurs after the reporting date will result in the financial statements being adjusted, or where such events merely require disclosure within the financial statements.
Such events are referred to in IAS 10 as ‘adjusting’ or ‘non-adjusting’ events.
Students who have studied Paper F3, Financial Accounting will have come across such terminology and it is imperative that they can differentiate between an adjusting and a non-adjusting event. IAS 10 prescribes the definitions of such events as follows:
Adjusting event
An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of
Subsequent events
Students of financial reporting and auditing papers will have to gain an understanding of how subsequent events (also known as ‘events after the reporting period’) affect the financial statements of an entity. This article will consider the financial reporting aspects concerning subsequent events using a case study type scenario, and will then discuss the auditing requirements that candidates of Paper F8, Audit and Assurance need to be aware of.
Financial reporting considerations
In almost all circumstances, financial statements will not be finalised until a period of time has elapsed between the year-end date and the date on which the financial statements are (expected to be) issued. Therefore, regard has to be given to events that occur between the reporting date and the date on which the financial statements are (expected to be) authorised for issue.
IAS 10, Events After the Reporting Period stipulates the accounting and disclosure requirements concerning transactions and events that occur between the reporting date and the (expected) date of approval of the financial statements. Among other things, IAS 10 determines when an event that occurs after the reporting date will result in the financial statements being adjusted, or where such events merely require disclosure within the financial statements.
Such events are referred to in IAS 10 as ‘adjusting’ or ‘non-adjusting’ events.
Students who have studied Paper F3, Financial Accounting will have come across such terminology and it is imperative that they can differentiate between an adjusting and a non-adjusting event. IAS 10 prescribes the definitions of such events as follows:
Adjusting event
An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of