Impact of events after the reporting period

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. Subsequent events These events identified can be classified in one of the following manners:
EventsAdjusting EventNon-Adjusting Event
MeaningThose events that provide evidence of conditions that existed at the end of the reporting periodThose events that are indicative of conditions that arose after the reporitng period
Recognition & measurementAn entity shall adjust the amounts recognised in its financial statements to reflect the adjusting eventAn entity shall not adjust the amounts recognised in its financial statements to reflect the adjusting event
DisclosureThe entity shall update disclosures that relate to event in light of new informationThe 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
ExampleA ruling or decision is reaching regarding litigation in which the company is involved in subsequent to year endAfter year end there is a fire at the production plant resulting in a significant operatonal impact

About the author

Naz Randeria is the Founder and Managing Director of Reliance Auditing Services. With more than 25 years’ experience in audit and accounting, Naz is an ASIC registered SMSF Auditor, SMSF Specialist Auditor, Registered Company Auditor, and Chartered Accountant.

She is actively involved in the SMSF audit sector and is passionate about sharing audit, compliance and SMSF knowledge with clients, professional colleagues and the wider public.

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DISCLAIMER: This information is an interpretation of rules, regulations and standards. It should not be considered as general or specific advice and neither purports, nor is intended to be advice on any particular matter. No responsibility can be accepted for those who act on the contents of this publication without first obtaining specific advice. Liability limited by a scheme approved under Professional Standards Legislation.