IFRS vs US GAAP Events after the reporting date

IFRS vs US GAAP Events after the reporting date

Standards Reference

US GAAP1

IFRS2

Subtopic 855-10 Subsequent events – Overall

IAS 1 Presentation of Financial Statements

IAS 10 Events after the reporting date

Note

The following discussion captures a number of the more significant GAAP differences under both ‘Events after the reporting date‘ reporting requirements. It is important to note that the discussion is not inclusive of all GAAP differences in this area.

The significant differences between U.S. GAAP and IFRS related to ‘Events after the reporting date‘ reporting requirements are summarized in the following tables.

Overview

US GAAP

IFRS

Like IFRS Standards, the financial statements are adjusted to reflect events that occur after the reporting date if those events provide evidence of conditions that existed at the reporting date.

However, unlike IFRS Standards, the period to consider goes to the date on which the financial statements are issued for public entities and to the date on which the financial statements are available to be issued for certain non-public entities.

The financial statements are adjusted to reflect events that occur after the reporting date, but before the financial statements are authorised for issue, if those events provide evidence of conditions that existed at the reporting date.

Like IFRS Standards, financial statements are generally not adjusted for

events that are a result of conditions that arose after the reporting date.

However, unlike IFRS Standards, there is no exception for when the going concern assumption is no longer appropriate, although disclosures are required.

Also unlike IFRS Standards, SEC registrants adjust the statement of financial position for a share dividend, share split or reverse share split occurring after the reporting date.

Financial statements are not adjusted for events that are a result of conditions that arose after the reporting date, except when the going concern assumption is no longer appropriate.

IFRS vs US GAAP Events after the reporting date

The classification of liabilities as current or non-current generally reflects circumstances at the reporting date, like IFRS Standards. However, unlike IFRS Standards, in some circumstances liabilities are classified as non-current based on events after the reporting date.

The classification of liabilities as current or non-current is based on circumstances at the reporting date.

Recognised events / Adjusting events

US GAAP

IFRS

Like IFRS Standards, the financial statements are adjusted to reflect events that occur after the reporting date if they provide evidence of conditions that existed at the reporting date (recognised events).

However, unlike IFRS Standards, for public entities, subsequent events are considered up to the date on which the financial statements are issued, which may be later than when the financial statements are authorised for issuance.

For non-public entities whose financial statements are not widely distributed, subsequent events are considered up to the date on which the financial statements are available to be issued, unlike IFRS Standards.

Also unlike IFRS Standards, tax uncertainties are not adjusted to reflect events that occur after the reporting date even if they provide evidence of conditions that existed at the reporting date. [855-10-25-1 – 25-2, 740-10-25-8, 30-7]

The financial statements are issued as at the date on which they are distributed for general use and reliance in a form and format that complies with US GAAP.

‘Issuance’ is the earlier of when the financial statements are widely distributed to all shareholders and other financial statement users, and when they are filed with the SEC. The issuance of an earnings release does not constitute issuance. [855-10-20]

The financial statements are adjusted to reflect events that occur after the reporting date but before the financial statements are authorised for issuance, if those events provide evidence of conditions that existed at the reporting date (adjusting events) or if they indicate that the going concern basis of preparation is inappropriate. [IAS 10.3, 8, 14]

IFRS vs US GAAP Events after the reporting date

Non-recognised events / Non-adjusting events

US GAAP

IFRS

Like IFRS Standards, financial statement amounts are not adjusted for events that are a result of new conditions that arose after the reporting date (non-recognised events).

However, unlike IFRS Standards, there is no specific requirement to adjust the financial statements when a subsequent event occurs indicating that the going concern basis of preparation is not appropriate; instead, disclosures are required. [855-10-25-3 – 25-4]

Financial statement amounts are not adjusted for events that are a result of conditions that arose after the reporting date (non-adjusting events). An exception is when events after the reporting date indicate that the financial statements should not be prepared on a going concern basis. [IAS 10.3, 10, 14]

Like IFRS Standards, non-recognised events may be of such a nature and significance that disclosure is required to keep the financial statements from being misleading.

Like IFRS Standards, for such non-recognised events entities are required to disclose the event and an estimate of its effect, or a statement that such an estimate cannot be made. [855-10-50-2]

The following is disclosed in respect of significant non-adjusting events: the nature of the event and an estimate of its financial effect, or a statement that an estimate cannot be made. [IAS 10.21]

Like IFRS Standards, detailed information about business combinations effected after the reporting date is disclosed. [805-10-50-1 – 50-3]

Detailed information about business combinations effected after the reporting date is disclosed. [IFRS 3.59–60, B64–B66]

Dividends

US GAAP

IFRS

Like IFRS Standards, cash dividends declared, proposed or approved by shareholders after the reporting date are non-recognised events that are not recognised as a liability in the financial statements because no obligation exists at the reporting date. [855-10-S99-1]

Cash dividends declared (i.e. the dividends are authorised and no longer at the discretion of the entity) after the reporting date are non-adjusting events that are not recognised as a liability in the financial statements, but are disclosed in the notes to the financial statements. This is because no obligation exists at the reporting date. [IAS 10.12–13, BC4]

Unlike IFRS Standards, SEC registrants are required to adjust the statement of financial position for a share dividend, share split or reverse split occurring after the reporting date but before the financial statements are issued. Their impact on EPS is explained below. [855-10-S25-2, S99-1]

Share dividends, share splits or reverse splits occurring after the reporting date are also non-adjusting events. Their impact on EPS is explained below. [IAS 10.22(f)]

Current vs non-current classification

US GAAP

IFRS

Unlike IFRS Standards, refinancings, amendments, waivers etc that occur after the reporting date are considered in determining the classification of debt at the reporting date.

Therefore, debt that would otherwise be classified as current is classified as non-current if the intent and ability to refinance is demonstrated by a refinancing or the existence of a financing agreement that was entered into after the reporting date but before the financial statements are issued.

Unlike IFRS Standards, liabilities that are payable on demand at the reporting date due to covenant violations are classified as non-current if the lender agrees through a waiver, before the issue of the financial statements, not to demand prepayment for more than one year (or operating cycle, if it is longer) from the reporting date.

Like IFRS Standards, if an entity expects, and has the discretion at the reporting date, to refinance or to reschedule payments on a long-term basis, then the debt is classified as non-current. [470-10-45-1, 45-4 – 45-5, 45-13 – 45-14]

Generally, the classification of long-term debt as current or non-current reflects circumstances at the reporting date.

Refinancings, amendments, waivers etc that are agreed after the reporting date are not considered in determining the classification of debt, but are disclosed as non-adjusting events if material.

However, if an entity expects, and has the discretion at the reporting date, to refinance or to reschedule payments on a long-term basis, then the debt is classified as non-current. [IAS 1.72–76]

IFRS vs US GAAP Events after the reporting date

Earnings per share

US GAAP

IFRS

Like IFRS Standards, EPS is restated to include the effect on the number of shares of certain share transactions that occur after the reporting date.

However, unlike IFRS Standards, the transactions themselves may also be recognised events (see above). [260-10-55-12, 55-15]

EPS is restated to include the effect on the number of shares of certain share transactions that occur after the reporting date even though the transactions themselves are non-adjusting events. [IAS 10.22(f), 33.64]

Disclosure of the subsequent-events date / Disclosure of the date of authorisation for issuance

US GAAP

IFRS

Unlike IFRS Standards, US GAAP requires the financial statements of non-SEC filers to include disclosure of the date to which subsequent events have been evaluated and whether that is the date on which the financial statements were issued or available to be issued. Unlike IFRS Standards, such disclosure is not required for SEC filers.

Unlike IFRS Standards, if the shareholders have the power to amend the financial statements, then the financial statements would not be considered as available for issuance until such approvals have been obtained. [855-10-20]

Disclosure is required in the financial statements of the date on which the financial statements were authorised for issuance and who gave such authorisation. If the shareholders have the power to amend the financial statements after issue, then the entity discloses that fact. [IAS 10.17]

Unlike IFRS Standards, US GAAP does not specify whether there can be only a single date of authorisation. [855-10]

In general, two different dates of authorisation for issuance of the financial statements (‘dual dating’) should not be disclosed, because we believe that only a single date of authorisation for issuance of the financial statements complies with IFRS Standards. [IAS 10.17, IU 05-13]

Discovery of a fraud after the reporting date

US GAAP

IFRS

A fraud may be discovered after the financial statements have been authorised for issuance. Like IFRS Standards, if information about the fraud could reasonably be expected to have been obtained and taken into account by an entity preparing financial statements when those financial statements were issued or available for issuance, as appropriate (see above), then subsequent discovery of such information is evidence of a prior-period error in those financial statements. [250-10-20]

A fraud may be discovered after the financial statements have been authorised for issuance. In general, if information about the fraud could reasonably be expected to have been obtained and taken into account by an entity preparing financial statements when those financial statements were authorised for issuance – e.g. in the case of a fraud within the entity itself – then subsequent discovery of such information is evidence of a prior-period error in those financial statements. [IAS 8.5, 10.9(e)]

In other circumstances, a fraud may be discovered after the reporting date but before the financial statements are issued or are available for issuance, as appropriate (see above).

Like IFRS Standards, in concluding whether the discovery of a fraud should be treated as a recognised or a non-recognised event related to reporting the fair value of financial assets in the scope of the financial instruments Codification Topics in financial statements that have not yet been issued or are not available

for issuance, an entity first identifies whether there is a question of existence, valuation or both.

In other circumstances, an external fraud may be discovered after the reporting date but before the financial statements are authorised for issuance.

In general, in concluding whether the discovery of the fraud should be treated as an adjusting or a non-adjusting event related to reporting the fair value of financial assets in the scope of the financial instruments standards in financial statements that have not yet been authorised for issuance, management should first identify whether there is a question of existence, valuation or both.

Like IFRS Standards, if the discovery of a fraud raises issues about the existence of the financial assets involved, then it should be treated as a recognised event for financial statements that have not yet been issued or are not available for issuance.

If, however, the fraud raises issues related only to the valuation of financial assets that do exist, then it should be treated as a non-recognised event for reporting the fair values of financial assets, like IFRS Standards.

In general, if the discovery of a fraud raises issues about the existence of the financial assets involved, then it should be treated as an adjusting event for financial statements that have not yet been authorised for issuance.

If, however, the fraud raises issues related only to the valuation of financial assets that do exist, then in general it should be treated as a non-adjusting event for reporting the fair values of financial assets.

Like IFRS Standards, if it is impracticable to separate the existence and the valuation issues, then the entire effect should be treated as an issue related to the existence of assets.

In general, if it is impracticable to separate the existence and the valuation issues, then the entire effect should be treated as an issue related to the existence of assets.

Annualreporting provides financial reporting narratives using IFRS keywords and terminology for free to students and others interested in financial reporting. The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Annualreporting is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org or the local representative in your jurisdiction.

IFRS vs US GAAP Events after the reporting date

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IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date IFRS vs US GAAP Events after the reporting date

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