Start with two different cut-offs
Ind AS 10 covers favourable and unfavourable events between the reporting period end and the date the board of directors, or the corresponding approving authority for another entity, approves the financial statements for issue. SA 560 separately governs the auditor’s work through the audit report date and the response to certain facts that become known later. A shareholder meeting or ROC filing does not by itself set either cut-off. Under SA 560, the issue date is the date the audited statements and auditor’s report are made available to third parties.
| Ind AS 10 category | How to decide | Financial statement treatment |
|---|---|---|
| Adjusting | New evidence bears on conditions already present at period end. | Adjust recognised amounts or recognise an item when required, and update relevant disclosures. |
| Non-adjusting | The underlying condition arose after period end. | Do not adjust amounts for that event. If material, disclose the nature and estimated financial effect or state that an estimate cannot be made. |
Going concern requires a separate assessment. Under Ind AS 10, if management determines after the reporting period that it intends to liquidate or cease trading, or has no realistic alternative, the going concern basis is inappropriate. For entities applying AS rather than Ind AS, apply the notified AS 4. It generally puts disclosures of material changes and commitments affecting financial position in the approving authority’s report and specifically addresses dividends in the notes; do not assume that every Ind AS 10 disclosure rule is identical.
Apply SA 560 at each stage
| Audit stage | Auditor’s response |
|---|---|
| Financial statement date through auditor’s report date (paragraphs 6–9) | Perform risk-based procedures to obtain sufficient appropriate evidence that events requiring adjustment or disclosure have been identified. Check whether such events are properly reflected and obtain the written representation. |
| After report date, before statements are issued (paragraphs 10–13) | There is no duty to continue searching. If a fact comes to light that might have changed the report had it been known at its date, discuss it with management and, where appropriate, those charged with governance. Determine whether amendment is needed and ask how management intends to address it. |
| After issue (paragraphs 14–17) | There is no routine duty to perform procedures. If a fact comes to light that might have changed the report, discuss it and determine whether amendment is necessary. If the statements are amended, audit the amendment, review how recipients of the earlier statements are informed and issue the appropriate new or amended report. If required action is not taken, take appropriate steps to seek to prevent reliance. Assess the legal circumstances; SA 560 does not mandate a blanket ROC notification. |
Under paragraph 7, understand management’s subsequent event procedures, inquire of management and, where appropriate, those charged with governance, read available minutes of relevant meetings after period end and inquire about matters discussed at meetings whose minutes are not yet available, and read the latest subsequent interim financial statements, if any. Perform the procedures to the report date or as near as practicable and address any gap on a risk basis. Bank transactions, credit notes, legal files and covenant certificates can provide further evidence. Direct legal communications depend on SA 501 and the circumstances. Paragraph 9 requires a written representation that events needing adjustment or disclosure have been appropriately reflected. Use SA 580 to identify the appropriate signers; a representation cannot replace sufficient appropriate evidence.
When can a report carry two dates?
Where management amends the statements before issuance, paragraph 11 ordinarily requires procedures on the amendment, extension of the relevant subsequent event procedures to the new report date and a new report dated no earlier than approval of the amended statements. Paragraph 12 permits a limited route only if law, regulation and the financial reporting framework allow management to restrict the amendment to the relevant event and those responsible to restrict their approval to that amendment. Where that route applies, either add a date restricted to the amendment or provide a new or amended report that clearly describes the restriction in the appropriate Emphasis of Matter or Other Matter paragraph. Dual dating does not waive other duties or shield the auditor from liability.
If management refuses an amendment that the auditor considers necessary before issue, apply paragraph 13. The response depends on whether the report has already been provided to the entity. Where the statements have been issued, paragraphs 15–17 govern the revised report, disclosure of the reason for revision and communications to previous recipients. Verify the legal ability to revise or restrict approval before choosing either route.
Seven worked cases
1. A customer enters insolvency after year end
A manufacturer reports gross receivables of ₹48 crore on 31 March 2024. A customer owing ₹3.40 crore is admitted to a corporate insolvency process on 18 May, 48 days after year end and before the 10 July audit report. Evidence of financial distress and a balance more than 180 days past due supports a condition that already existed at 31 March. Under Ind AS 10 paragraph 9(b)(i), use the later evidence in the year-end impairment assessment.
If the supported expected recovery is zero and no allowance was previously recognised for that customer, the year-end entry is a ₹3.40 crore impairment loss and corresponding allowance, reducing pre-tax profit by ₹3.40 crore and leaving ₹44.60 crore net receivables before other allowances. Measure expected credit losses under Ind AS 109 where applicable; a write-off is a separate decision and follows the standard’s no-reasonable-expectation-of-recovery criterion.
2. An April warehouse fire
A distributor had ₹35 crore of inventory at 31 March. An electrical fire on 22 April destroys inventory with a carrying amount of ₹8.50 crore. Assume the fire arose after year end and before approval, and there was no separate year-end impairment. It is a non-adjusting event under Ind AS 10. If material, disclose the nature and financial effect: the gross loss is ₹8.50 crore and an estimated 60% insurance recovery is ₹5.10 crore, implying an illustrative net exposure of ₹3.40 crore. Distinguish the estimate from an admitted claim. Assess financing, liquidity and the prospects of recovery in the going concern review; ₹18 crore of liquid reserves alone does not settle that assessment.
3. Litigation settles in June
A company disclosed a ₹15 crore contingent exposure on a patent dispute already in existence at 31 March. A binding 12 June settlement for ₹9 crore before approval confirms a year-end obligation on the assumed facts. Under Ind AS 10 paragraph 9(a), adjust the earlier estimate or recognise a provision if none was recorded. If ₹9 crore is the appropriate measurement and no liability was recognised, record a ₹9 crore expense and corresponding liability. Update the disclosures and determine current or non-current presentation from the settlement terms.
4. Inventory sold below cost after year end
A steel fabricator held 1,200 tonnes at ₹60,000 each, a carrying cost of ₹7.20 crore. It sold 400 tonnes on 5 May at ₹42,000 per tonne for ₹1.68 crore gross. Under Ind AS 10 paragraph 9(b)(ii), a subsequent sale may provide year-end net realisable value evidence. Check whether the sale was orderly, the rest of the stock comparable, and the price decline and necessary selling costs reflect conditions at year end. If ₹42,000 per tonne is the supported year-end net realisable value of all 1,200 tonnes, the closing value is ₹5.04 crore and the write-down ₹2.16 crore. A new market collapse after year end does not justify that adjustment on its own.
5. Final dividend proposed after year end
The board proposes a ₹15 crore final dividend on 25 May, after the 31 March year end. Assume no obligation existed at 31 March and the proposal is known before approval for issue. Recognise no dividend liability at 31 March. Disclose the proposed amount, and related per-share information as required, in accordance with Ind AS 10 and Ind AS 1. Distinguish the board proposal from shareholder declaration of a final dividend and from an interim dividend declared by the board.
6. A loan recall arrives after the auditor’s report
The report is dated 15 July 2024. On 2 August, before the audited statements are made available to third parties, the bank issues a ₹50 crore loan recall notice. First inspect the covenant, measurement date and lender correspondence. If the default existed at 31 March and made the loan payable on demand, assess year-end classification and disclosures under the Ind AS 1 and Ind AS 10 provisions then in force, including the treatment of an applicable lender waiver before approval. If the condition arose only after year end, consider material non-adjusting disclosure and the separate going concern assessment. The notice date alone does not decide which applies.
If the statements need amendment before issue, follow paragraphs 10–13 of SA 560. Where the legal and approval conditions in paragraph 12 are satisfied and sufficient audit work on the amendment is completed on 10 August, a date such as “15 July 2024, except for Note 35, for which the date is 10 August 2024” can illustrate restricted dating. Otherwise use the ordinary reissuance route. A planned 10 September AGM does not establish the issuance date. For annual periods beginning on or after 1 April 2026, check the amended Ind AS 1 requirements and the related Ind AS 10 transition; do not apply the earlier Indian waiver exception to such periods.
7. A major post-year-end acquisition
A company signs a binding ₹110 crore share purchase agreement on 15 April 2024. Assume it neither controlled the target nor had a relevant obligation at 31 March. This is not a year-end business combination. For a material event before approval, disclose the agreement, its financial effect or the inability to estimate it and relevant financing commitments. If control is obtained before approval, also assess the specific Ind AS 103 post-period acquisition disclosures. A signed agreement and a completed acquisition are different milestones.
Common questions and workpaper checks
- What if the debt is credit-insured? Assess the customer’s impairment using the evidence about year-end conditions. Determine whether the credit enhancement is included in the ECL estimate under Ind AS 109 or is recognised separately under applicable requirements. Do not ignore the impairment or double count insurance recoveries.
- What if management refuses a material adjustment? Document the misstatement, communicate as required and assess materiality and pervasiveness under SA 705 (Revised). An identified material misstatement can require a qualified opinion or an adverse opinion; quantify its financial effects when practicable.
- What about a new tax rate? Ind AS 12 uses rates and laws enacted or substantively enacted at period end as applicable to the relevant amounts. A change enacted or substantively enacted only after year end is ordinarily non-adjusting under Ind AS 10; disclose a material effect or the inability to estimate it. A budget announcement alone is not automatically substantive enactment.
- Is this a prior period error? Under Ind AS 8, a prior period error stems from failing to use or misusing reliable information available or reasonably obtainable when earlier financial statements were approved. Correct material errors retrospectively unless impracticable. New evidence about a condition at the current period end is assessed under Ind AS 10 before the current statements are approved.
- What should the file show? Record the period end, approval, report and issue dates, information available at each date, procedures, conditions underlying each event, adjustment or disclosure rationale and resolution of outstanding matters. Track covenant and litigation updates, management representations and any communications about a changed report.
Sources
- ICAI: SA 560, Subsequent Events, paragraphs 5–17
- MCA: Ind AS 10, Events after the Reporting Period
- Companies (Indian Accounting Standards) Second Amendment Rules, 2025: loan classification transition under Ind AS 1 and Ind AS 10 (copy of the Gazette notification)
- Companies (Accounting Standards) Rules, 2021, including AS 4
- ICAI: SA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report
- ICAI standards, including SA 501, SA 570 and SA 580
- ICAI: Ind AS 109, Financial Instruments, expected credit losses
- India Code: Companies Act, 2013, including Sections 123 and 134