Events After the Reporting Period: IAS 10 Wiecek and Young IFRS Primer Chapter 22

Events After the Reporting Period Related standards IAS 10 Current GAAP comparisons IFRS financial statement disclosures Looking ahead End-of-chapter practice

Related Standards SAS 1 Codification of Auditing Standards and Procedures SEC staff pronouncements

Related Standards IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 10 – Overview Objective and scope Recognition and measurement Disclosure

IAS 10 – Objective and Scope This standard assists in the determination of when to recognize transactions that occur after the reporting period Furthermore, it dictates when additional disclosures should be made regarding these events Events after the reporting period are defined as follows: . . . those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue

IAS 10 – Objective and Scope Two types of events can be identified: (a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period) and (b) those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period) Thus, transactions that occur after year end are divided into two types

IAS 10 – Recognition and Measurement Adjusting events are recognized in the statements of financial position and profit or loss if they occur prior to the statements being authorized

IAS 10 – Recognition and Measurement Determining when the statements are authorized is a matter of judgment but depends on: the structure of management statutory requirements, and an entity’s governance and procedures For example: if the board of directors must formally approve the financial statements before issue, then this is the point that divides the transactions between those recognized this year and those that are not

IAS 10 – Recognition and Measurement

IAS 10 – Recognition and Measurement

IAS 10 – Recognition and Measurement

IAS 10 – Disclosure The following disclosures are required to be presented in the financial statements: • The date when the statements were authorized, including who gave the authorization • Where adjusting events occur, related disclosures should be updated, as well; and • Where non-adjusting events occur and are material, the nature of the event and an estimate of its financial effect (or a statement that the financial effect cannot be determined)

Current GAAP Comparisons Page 50 of 164 of http://www.kpmg.co.uk/pubs/IFRScomparedtoU.S.GAAPAnOverview(2008).pdf

IFRS Financial Statement Disclosures Royal Dutch Shell http://www-static.shell.com/static/investor/downloads/ financial information/reports/2007/2007_annual_report.pdf Post-Balance Sheet Events page 165 of 224 L’Oreal http://www.lorealfinance.e-loreal.com/site/us/contenu/rapport/ rapport2007/pdf/2007_Full_Annual_Report.pdf Post-Balance Sheet Events page 249 of 295

Looking Ahead IASB currently does not have this topic on its agenda However, it is part of the Memorandum of Understanding between IASB and FASB and is on the agenda for short-term convergence FASB is working on incorporating guidance provided in auditing standards (AICPA) into U.S. GAAP (codifying existing standards) In addition, FASB is looking at minor differences between IFRSs and U.S. GAAP to see if they can be eliminated

Looking Ahead There are two differences between IFRS and U.S. GAAP that will not be addressed in the short term These relate to the following: • Refinancing of short-term obligations and • Curing breaches of borrowing covenants

End-of-Chapter Practice

End-of-Chapter Practice

End-of-Chapter Practice

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