SFRS(I) 1-10 prescribes when an entity should adjust its financial statements for events that occur after the reporting period, and the disclosures it should give about such events. There is always a gap between the reporting date and the date the financial statements are authorised for issue, and things happen in that window. The standard's central distinction is between events that provide evidence of conditions that already existed at the reporting date (which are adjusted for) and events that reflect new conditions arising afterwards (which are disclosed but not adjusted). It is the Singapore equivalent of IAS 10 under IFRS, and is in substance IAS 10 as applied in Singapore.
Objective and scope
The objective is to prescribe when an entity should adjust its financial statements for events after the reporting period, and the disclosures about the date of authorisation for issue and about those events. The standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the reporting period indicate that the going concern assumption is not appropriate.
What are events after the reporting period
Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types are identified: adjusting events (those providing evidence of conditions that existed at the end of the reporting period) and non-adjusting events (those indicative of conditions that arose after the reporting period). An entity discloses the date of authorisation for issue and who gave that authorisation.
Adjusting events
An entity adjusts the amounts recognised in its financial statements to reflect adjusting events — events that provide evidence of conditions that existed at the reporting date. Examples include the settlement after the reporting period of a court case confirming a present obligation existed at the reporting date; the receipt of information indicating that an asset was impaired at the reporting date (such as a customer's bankruptcy confirming a receivable was impaired, or the sale of inventories giving evidence of their NRV at the reporting date); the determination of the cost of assets purchased, or proceeds from assets sold, before the reporting date; and the discovery of fraud or errors. The key point is that the condition already existed at the reporting date — the later event simply gives better evidence of it.
Non-adjusting events
An entity does not adjust for non-adjusting events — events indicative of conditions that arose after the reporting date. A common example is a decline in the fair value of investments between the reporting date and authorisation, which reflects circumstances arising after the reporting period. Other examples include a major business combination, the destruction of a major plant by fire, and abnormally large changes in asset prices or exchange rates, after the reporting period. If material, non-adjusting events are disclosed (their nature and an estimate of the financial effect, or a statement that an estimate cannot be made).
Dividends
If an entity declares dividends to holders of equity instruments after the reporting period, it does not recognise those dividends as a liability at the end of the reporting period, because no obligation existed at the reporting date. Such dividends are disclosed in the notes.
Going concern
An entity does not prepare its financial statements on a going concern basis if management determines after the reporting period either that it intends to liquidate the entity or cease trading, or has no realistic alternative but to do so. Where the going concern assumption is no longer appropriate, the effect is so pervasive that a fundamental change in the basis of accounting is required, rather than merely an adjustment.
A worked example
A Singapore company's financial statements for the year ended 31 December are authorised for issue on 15 March. Four things happen in the window:
| Event (occurs Jan–Mar, before 15 Mar authorisation) | Condition existed at 31 Dec? | Type | Treatment |
|---|---|---|---|
| A customer owing a large balance at 31 Dec goes bankrupt in January | Yes — receivable was impaired at year-end | Adjusting | Write down the receivable in the 31 Dec accounts |
| Inventories on hand at 31 Dec are sold in February below cost | Yes — evidence of NRV at year-end | Adjusting | Write inventories down to NRV at 31 Dec |
| A fire destroys a warehouse in February | No — the fire arose after year-end | Non-adjusting | Do not adjust; disclose nature and estimated effect |
| Directors declare a dividend in February | No — declared after year-end | Non-adjusting | Do not recognise a liability at 31 Dec; disclose |
The distinction always turns on one question: did the condition exist at the reporting date, or arise afterwards?
How SFRS(I) 1-10 relates to IFRS
SFRS(I) 1-10 is identical to IAS 10 under IFRS — the same distinction between adjusting and non-adjusting events, the same treatment of dividends declared after the reporting period, and the same going concern override. An entity familiar with IAS 10 will find SFRS(I) 1-10 to be the same standard.
Common pitfalls
Recurring issues include adjusting for a non-adjusting event (for example, writing down investments for a post-reporting-date market decline) or failing to adjust for an adjusting event (for example, not writing down a receivable when a customer's post-year-end bankruptcy confirms impairment at the reporting date); recognising a dividend declared after the reporting period as a liability at the reporting date; and failing to disclose material non-adjusting events or the date of authorisation for issue.
Why this is cleaner on a unified system
Assessing events after the reporting period — identifying which confirm conditions at the reporting date and which reflect new conditions — is more reliable when the underlying data and the accounts sit in one connected system, so that adjustments can be made accurately and the related disclosures produced. When the accounts draw on a single source of truth, reflecting adjusting events and disclosing non-adjusting ones is more straightforward than reconciling figures held in separate tools during the period between the reporting date and authorisation for issue.
This article is a detailed educational summary of SFRS(I) 1-10 in plain language. It is not a substitute for the full text of the standard. Accounting standards are amended from time to time; always verify the current, authoritative text of SFRS(I) 1-10 as issued by the Singapore Accounting Standards Council before relying on it, and consult a qualified professional accountant for application to your specific circumstances.