Events after year end: when later news changes the year-end figures
In a hypothetical set of accounts for the year to 31 March 2026, due for authorisation on 30 June, two pieces of news arrive. On 20 April a fire destroys equipment. On 20 May a court settlement fixes a claim for harm caused before the year end at £50,000. Both arrive after the reporting date and both are bad news. Under UK-adopted IAS 10, only the settlement changes the year-end figures. The deciding question is not when the information arrived but whether the condition it describes existed at 31 March.
The window closes at authorisation
IAS 10 covers favourable and unfavourable events between the end of the reporting period and the date the financial statements are authorised for issue. Adjusting events provide evidence of conditions that existed at the end of the period. Non-adjusting events indicate conditions that arose afterwards (paragraph 3).
The boundary is authorisation, which is not necessarily the date shareholders approve the accounts or the date they are filed (paragraphs 4 to 6). The accounts disclose the authorisation date and who gave it (paragraph 17), so the evidence gathering has a fixed end point. This article covers UK-adopted IFRS, not FRS 102 or US GAAP.
Sources and context, checked :
Two events, two outcomes
The two events are independent, each is assumed material, amounts are in pounds and there are no insurance or tax effects.
IAS 10 paragraph 9 gives the settlement of a court case that confirms a year-end obligation as an adjusting event. A provision of £25,000 was already recorded, so the entry is:
Dr claim expense £25,000; Cr provision £25,000. The closing provision becomes £50,000.
Destruction of a production plant by fire after the reporting period is one of the standard's own non-adjusting examples (paragraph 22). The equipment stays at its £40,000 carrying amount in the 31 March statement of financial position, and the loss belongs to the following period. If it is material, paragraph 21 requires disclosure of the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be made.
Most cases need the facts, not a calendar. A customer entering bankruptcy after the year end usually confirms a loss that already existed on the receivable at the reporting date, but that still depends on what was true at 31 March (paragraph 9). Neither 'ignore everything after the year end' nor 'adjust for everything received before signing' is the rule.
| Evidence received before authorisation | Condition at 31 March | Year-end consequence |
|---|---|---|
| 20 May court settlement confirms a £50,000 obligation for harm before the year end; existing provision £25,000 | The present obligation already existed | Increase the provision and expense by £25,000 |
| 20 April fire destroys equipment with a carrying amount of £40,000; no damage existed at 31 March | A new condition arising after the year end | No reduction to the 31 March carrying amount; disclose the nature and estimated effect if material |
Sources and context, checked :
When later news questions going concern
One exception overrides the condition test. If, after the reporting date, management determines that it intends to liquidate the entity or cease trading, or that it has no realistic alternative but to do so, the accounts must not be prepared on a going concern basis (paragraph 14). A note describing the event is not enough in that case, because the basis of accounting itself changes. A fire is normally next-period news, but its effect on the business still needs that separate assessment.
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Keep a dated event log
Our suggestion is one log running from the reporting date to authorisation, with a line for every candidate event: what happened, the date the underlying condition arose, the evidence, the amount, the decision to adjust, disclose or do neither, the disclosure wording and who approved it. Close it on the authorisation date, not the filing date. In the last week before authorisation, ask budget holders and whoever handles legal matters whether anything has happened since the year end that is not yet on the log.