Ind AS 10 answers a practical year-end question: what should an entity do with important information or events that arise after the reporting date but before the financial statements are approved for issue? The answer depends on whether the later event provides evidence about a condition that already existed at the reporting date or reflects a new condition arising afterwards.
The current ICAI Compendium of Indian Accounting Standards 2025-26, Volume II includes Ind AS 10, and the official Ind AS 10 text sets out the recognition, measurement and disclosure framework.
What period does Ind AS 10 cover?
Events after the reporting period are favourable or unfavourable events occurring between the end of the reporting period and the date the financial statements are approved for issue. For a company, the standard refers to approval by the Board of Directors; for another entity, it is the corresponding approving authority.
This approval date defines the cut-off for the Ind AS 10 review. If a company’s Board approves the financial statements before shareholders later approve them at an annual meeting, the Board approval date is the approval-for-issue date for this purpose.
The central distinction: adjusting versus non-adjusting
The most useful test is: what condition existed at the reporting date?
- Adjusting event: the later event provides evidence about a condition that existed at the end of the reporting period. The entity adjusts recognised amounts, or recognises an item that should be recognised.
- Non-adjusting event: the later event is indicative of a condition that arose after the reporting period. The entity does not adjust the year-end recognised amounts merely because the later event occurred.
The date on which cash moves, a court order is issued or a customer formally fails is not enough by itself. Finance teams should determine whether the later event reveals more about a year-end condition or creates a genuinely new post-year-end condition.
Common adjusting events
- Court settlement: if a post-year-end settlement confirms that the entity already had a present obligation at the reporting date, the related provision is adjusted or recognised as required.
- Customer bankruptcy: bankruptcy after the reporting period can confirm that the customer was credit-impaired at year-end, requiring the receivable impairment assessment to be updated.
- Inventory sale after year-end: the later selling price may provide evidence about net realisable value at the reporting date.
- Final determination of asset cost or sale proceeds: later information may clarify amounts relating to transactions completed before year-end.
- Bonus or profit-sharing amount: a later determination may require adjustment where a legal or constructive obligation already existed at year-end.
- Discovery of fraud or error: if it shows that the financial statements were incorrect at the reporting date, the financial statements are adjusted.
Common non-adjusting events
Ind AS 10 gives a decline in the fair value of investments between the reporting date and approval date as an example where the decline normally reflects later circumstances rather than the investment’s condition at year-end. The year-end amount is therefore not adjusted merely for that later decline.
Other major post-year-end developments can also be non-adjusting when the underlying condition did not exist at year-end. The accounting question then shifts to disclosure: if the event is material, readers may need to know about it even though the year-end numbers remain unchanged.
Worked example: customer failure after year-end
Assume an entity has a material trade receivable outstanding at 31 March. In April, before the Board approves the financial statements, the customer enters insolvency proceedings. The finance team should investigate the customer’s position at 31 March rather than classify the event mechanically as non-adjusting merely because the formal insolvency occurred later.
If the insolvency confirms severe financial difficulty that already existed at year-end, the April event provides evidence about a reporting-date condition and is adjusting. If the customer was financially sound at 31 March and an unrelated catastrophic event in April caused the collapse, that may indicate a condition arising after year-end and therefore a non-adjusting event, subject to material disclosure.
Dividends declared after the reporting period
Ind AS 10 states that dividends declared after the reporting period are not recognised as a liability at the end of that reporting period. If declared after year-end but before approval for issue, they are disclosed in the notes in accordance with the applicable presentation requirements because no obligation existed at the reporting date.
Going concern is different from an ordinary adjustment
If management determines after the reporting period that it intends to liquidate the entity or cease trading, or has no realistic alternative but to do so, Ind AS 10 says the financial statements should not be prepared on a going-concern basis. This is more fundamental than adjusting one asset or liability because it can change the basis of accounting.
Disclosure requirements finance teams often miss
Ind AS 10 requires disclosure of the date on which the financial statements were approved for issue and who gave that approval. It also requires disclosures to be updated when information received after the reporting period relates to conditions that existed at year-end, even where the new information does not change a recognised amount.
For each material non-adjusting event, the entity discloses the nature of the event and an estimate of its financial effect, or states that such an estimate cannot be made. “Non-adjusting” therefore does not mean “irrelevant.”
Practical year-end checklist
- Identify the reporting date and formal approval-for-issue date.
- Maintain a post-year-end event register through the approval date.
- For each event, document the condition that existed at the reporting date.
- Classify the event based on evidence, not merely chronology.
- Quantify the adjustment where a reporting-date condition is confirmed.
- Assess materiality and disclosure for non-adjusting events.
- Revisit going concern when later events materially weaken the entity’s ability to continue.
- Update related disclosures when later information sheds new light on a year-end condition.
- Document the approval date, approving authority, conclusion and supporting evidence.
Common mistakes to avoid
- Assuming every event after 31 March is automatically non-adjusting.
- Adjusting year-end numbers for a genuinely new post-year-end condition.
- Ignoring material non-adjusting events because they do not change recognised amounts.
- Using the shareholder meeting date instead of the applicable approval-for-issue date.
- Recognising a post-year-end dividend as a year-end liability.
- Treating a going-concern breakdown as a routine disclosure issue.
Practical takeaway
Apply Ind AS 10 in two steps: establish the review window up to approval of the financial statements, then ask whether each later event provides evidence about a condition existing at year-end or reflects a new condition arising afterwards. Adjust the first category, do not adjust the second merely for the later event, but disclose material non-adjusting events properly. Document the reasoning so management, auditors and reviewers can trace the conclusion.
