The Australian Accounting Standards Board made Accounting Standard AASB 110 Events after the Reporting Period to outline the treatment for events that occur after reporting period.
These events can be described as those events, favourable or unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue.
These events identified can be classified in one of the following manners:
| Events | Adjusting Event | Non-Adjusting Event |
|---|---|---|
| Meaning | Those events that provide evidence of conditions that existed at the end of the reporting period | Those events that are indicative of conditions that arose after the reporitng period |
| Recognition & measurement | An entity shall adjust the amounts recognised in its financial statements to reflect the adjusting event | An entity shall not adjust the amounts recognised in its financial statements to reflect the adjusting event |
| Disclosure | The entity shall update disclosures that relate to event in light of new information | The entity shall disclosure the following for each material category of non-adjusting event after reporting period: - the nature of the event; and - an estimate of its financial effect, or a statement that such an estimate cannot be made |
| Example | A ruling or decision is reaching regarding litigation in which the company is involved in subsequent to year end | After year end there is a fire at the production plant resulting in a significant operatonal impact |