Quick answer
Subsequent events occur after the reporting date but before the financial statements are authorized for issue under IFRS or completed under ASPE. An adjusting event provides further evidence about a condition that already existed at period end; a non-adjusting event reflects a condition that arose later and is not recorded in the period-end amounts, though material information may need disclosure.
Financial statements describe a reporting date, but they are prepared later. Information arriving during that interval can clarify what was already true at year-end or can describe a genuinely new event. The treatment depends on whether the condition existed at the reporting date, not simply when the information arrived.
Adjusting and non-adjusting subsequent events
Adjusting
Later evidence confirms or refines a condition existing at the reporting date. Update recognized amounts or disclosures for that period.
Non-adjusting
The condition arose after the reporting date. Do not change period-end recognized amounts, but disclose material information as required.
Condition at the reporting date
Ask: what condition existed at the reporting date? A customer’s January bankruptcy may confirm December credit deterioration, while a February fire normally begins with the fire itself. Dates help establish evidence, but the economic condition controls the classification.
Use later evidence about a year-end receivable
At December 31, 2026, a customer owed Northern Supply $40,000 and was already experiencing severe financial difficulty. Before the statements are authorized under IFRS or completed under ASPE, the customer enters bankruptcy and current evidence supports an expected collection of only $6,000. Assume no allowance has yet been recorded and the applicable receivable measurement supports a $6,000 net balance. The later event confirms the reporting-date credit condition.
The receivable requires a $34,000 allowance at December 31: $40,000 owed − $6,000 expected collection = $34,000. The bankruptcy was announced later, but it supplied evidence about a condition already present.
Financial-statement effect
Scroll horizontally to see all columns.
| Statement | Account | Effect |
|---|---|---|
| Income statement | Credit Loss Expense | Increases by $34,000 for 2026 |
| Balance sheet | Allowance for Credit Losses | Reduces net receivables to $6,000 |
| Notes | Credit risk information | Update disclosures required by the applicable framework |
- Income statement
- AccountCredit Loss Expense
- EffectIncreases by $34,000 for 2026
- Balance sheet
- AccountAllowance for Credit Losses
- EffectReduces net receivables to $6,000
- Notes
- AccountCredit risk information
- EffectUpdate disclosures required by the applicable framework
Treat a later fire as a new condition
A warehouse is in normal condition at December 31, 2026 and is destroyed by fire on February 10, 2027, before the 2026 statements are authorized under IFRS or completed under ASPE. The loss is material.
The fire does not change the warehouse’s December 31 carrying amount because the destructive condition arose in February. The entity discloses the nature of the material event and an estimate of its financial effect, or explains when that estimate cannot be made.
Completion, authorization, and going concern
Under IAS 10, the review window runs to authorization for issue under the entity’s governance process. ASPE Section 3820 instead identifies when the statements are complete from the entity’s management structure and reporting process. Neither cut-off is automatically the filing date or shareholder approval. If later events show the going-concern basis is no longer appropriate, the consequence is more fundamental than an ordinary adjusting or non-adjusting classification.
In ordinary language, loss of going concern means the business can no longer reasonably be assumed to continue operating and meeting its obligations in the normal course. The statements may therefore need a different basis, rather than simply one more period-end adjustment.