IFRS – IAS 10: Events after the reporting period

The International Accounting Standards Committee (IASC) released International Accounting Standard 10 (IAS 10) to address the topic of events which happen after the reporting period but before the financial reports are issued – often referred to as subsequent events.

These are important because there are several events which may occur in a business in which the shareholders need to be informed of, as financial statements are often released on a lag period from the time in which they are dated.

If subsequent events were not reported, a company could release financial statements in March, that were dated December 31 stating the company was healthy. However, if an unfavorable lawsuit ruling came back in February, then this would undoubtedly taint the report and should be disclosed.

IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.

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