AS 4 Events after Year-End: Record the Evidence and Decision

A customer becomes insolvent after year-end and a different loss arises from a later flood. The useful result is a working that explains the facts, the calculation or classification, and the evidence behind the conclusion. This guide shows how to prepare that working and where a reviewer should investigate before accepting the result.

Scope and applicable period

Financial reporting for FY 2025–26 under the applicable Accounting Standards (AS) framework. Assess entity-specific applicability and relief. Ind AS requirements are a separate analysis.

Verification date: 11 October 2026. Figures and rates identified as assumptions are teaching examples; apply the stated conditions and the actual facts to a real assignment.

The key principle

AS 4 analyses events between the balance-sheet date and approval of financial statements. Later evidence about a condition existing at year-end can require adjustment; an event creating a new condition later generally does not, though material disclosure and going-concern implications may arise. Date alone is not the complete test. Establish what existed at the reporting date.

Worked example

If the customer was already in financial difficulty at year-end, its insolvency can support adjustment of the receivable estimate. A later flood should not be retrospectively treated as if the physical damage existed on 31 March. Assess material non-adjusting disclosure and any effect on going concern separately. Maintain a dated event register through approval, with the evidence, proposed treatment and review decision for each event.

A practical sequence

Establish the financial-statement approval date and gather significant events occurring after the reporting date but before approval. Determine whether each event provides evidence of conditions existing at the reporting date or creates a later condition.

Record the adjustment or disclosure decision under the applicable standard. Reconcile any revised balances and disclose material non-adjusting events as required.

Evaluate going concern separately where events indicate that its basis may no longer be appropriate.

Choose the framework before drafting the note

Recognition, measurement, presentation and disclosure are related but distinct. First establish whether the entity follows AS or Ind AS and whether company Schedule III or ICAI non-corporate guidance governs presentation. Then determine the accounting treatment and assemble the applicable disclosure. A well-formatted note cannot cure an unsupported asset, liability or income figure. Reconcile note schedules to the trial balance and preserve comparative information. Where relief applies to an entity, assess the particular standard or guidance rather than assuming that small size removes every requirement. Record significant judgement with the supporting facts.

Evidence checklist

Keep the following records linked to the same entity, period and working version. Identify missing items explicitly; a checked box should mean the document was examined and supports the stated conclusion.

• Balance-sheet and approval dates
• Subsequent event chronology
• Evidence of conditions at year-end
• Estimate and adjustment working
• Materiality, disclosure and going-concern review

Common mistakes and how to avoid them

• Adjusting every event before approval. Compare the conclusion with the balance-sheet and approval dates and resolve any conflicting facts.
• Ignoring later evidence of an existing bad debt. Trace the affected item to the evidence of conditions at year-end before finalising the working.
• Assuming non-adjusting means no disclosure consideration. Use the materiality, disclosure and going-concern review to make the final position and remaining exceptions clear.

Before you finalise

Recheck the example’s assumptions against the actual assignment, resolve the identified exceptions and make the final figure or conclusion traceable to its source. Preserve the reviewed version and the reason for material changes. For this task, the materiality, disclosure and going-concern review should agree with the conclusion presented to the client, reviewer or authority.

Frequently asked question

Is every April event excluded from March financials? No. Determine whether it provides evidence of a condition already existing at the reporting date.

Sources and further reading

• ICAI Accounting Standard AS 4
• ICAI AS 1 — Disclosure of Accounting Policies

Related guide: Year end accounting adjustments accruals prepayments cutoff.