Section 26 – Events after the End of the Reporting Period

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Section 26 – Overview

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Section 26: Events after the End of the Reporting Period

Summary

Section 26 deals with the treatment of events after the balance sheet date and whether they are considered an adjusting or non-adjusting post balance sheet event.

What is new or different?

Section 32 is the very same as old GAAP/FRS 102/FRSSE so there is nothing new or different with the exception of disclosures. Under FRS 105 entities are only required to disclosure contingencies, commitments and guarantees and nothing else.

What are the key points?

Events after the end of the reporting period are divided into two types:

Adjusting events – these provide evidence of conditions that existed at the end of the reporting period; or
Non-adjusting events – these relate to conditions that arose after the end of the reporting period.

Non adjusting events are required to be disclosed in the financial statements.

Examples of adjusting events include:

the settlement of a court case that retrospectively confirms the existence of a year-end obligation;
the determination of the value of profit-sharing or bonus payments; and
the receipt of information indicating that an asset was impaired as at the year end.

Examples of non-adjusting events include a decline in the market value of investments and a favourable decision on a court case that had been in progress at the year end. If dividends are declared after the year end they are not included as a liability.

The going concern basis of preparation may not be used if management determines after the balance sheet date that it either intends to liquidate or cease trading, or has no realistic alternative but to do so.

Section 26.7 gives further examples of non-adjusting events.

What do accountants need to do?

Recognise that there are no differences on transition from old GAAP/FRSSE/FRS 102. That said accountants need to be aware of sections to refer to when doing up detailed technical papers in relation post balance sheet events.

What do Companies need to do?

Recognise that there are no differences on transition from old GAAP/FRSSE/FRS 102.

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