What Are International Accounting Standards

(IAS) ?
International Accounting Standards (IAS) are older accounting standards issued by
the International Accounting Standards Board (IASB), an independent
international standard-setting body based in London. The IAS were replaced in001
by International Financial Reporting Standards (IFRS).
International accounting is a subset of accounting that considers international
accounting standards when balancing books.

 International Accounting Standards were replaced in 2001 by the

International Financial Reporting Standards (IFRS)
 Currently, the United States, Japan, and China are the only major capital
markets without an IFRS mandate
 The U.S. accounting standards body has been collaborating with the
Financial Accounting Standards Board since 2002 to improve and converge
American accounting principles (GAAP) & IFRS.

IAS 10- Events After The Reporting Period.

Overview.

IAS 10 Events After The Reporting Period contains requirements for when events
after the end of the reporting period should be adjusted in the financial
statements. Adjusting events are those providing evidence of conditions existing
at the end of the reporting period, whereas non-adjusting events are indicative of
conditions arising after the reporting period (the latter being disclosed where
material).

 Issued: in 1978; re-issued in 1999 and 2003, followed by amendments

 Effective date: 1 January 2005
 What it does:
o IAS 10 sets the rules when an entity should adjust its financial
statements for events after the reporting period together with the
necessary disclosures.
 o It defines both adjusting and non-adjusting events.
o There are 4 main types of material events after the reporting period:
1. Dividends declared in this period after the reporting period,
but before approval of the financial statements;
2. Going concern assumption no longer applies after the
reporting period;
3. Events that were unknown, or unclear, at the reporting date;
4. Conditions arising after the reporting period, not existing prior
the end of the reporting period.

History of IAS 10 Events After The Reporting Period.

July 1977
Exposure Draft E10 Contingencies and Events Occurring After the Balance
Sheet Date

October 1978 v IAS 10 Contingencies and Events Occurring After the Balance Sheet Date
effective 1 January 1980

1994 IAS 10 (1978) was reformatted

August 1997 Exposure Draft E59 Provisions, Contingent Liabilities and Contingent Assets

September 1998 IAS 37 Provisions, Contingent Liabilities and Contingent Assets

1 July 1999 Effective date of IAS 37, which superseded those portions of IAS 10 (1978)
dealing with contingencies

November 1998 Exposure Draft E63 Events After the Balance Sheet Date
May 1999 IAS 10 (1999) Events After the Balance Sheet Date superseded those
portions of IAS 10 (1978) dealing with events after the balance sheet date

1 January 2000 Effective date of IAS 10 (1999)

18 December 2003 evised version of IAS 10 issued by the IASBR

1 January 2005 Effective date of IAS 10 (Revised 2003)

6 September 2007 Retitled Events after the Reporting Period as a consequential amendment
resulting from revisions to IAS 1

Objective of IAS 10

The objective of IAS 10 is to prescribe:

•when an entity shall adjust its financial statements for events after reporting
period; and

•the disclosures that an entity shall give about the date when the financial
statements were authorized for issue and about events after the reporting period.

The standard also requires that an entity shall 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.
Main rules of IAS 10
Event after the reporting period is favorable or unfavorable event that occurs
between :

 The end of the reporting period and

 The date that the financial statements are authorized for issue.

There are two types of events after the reporting period:

1. Adjusting events
2. Non-adjusting events.

 Adjusting events.
Adjusting event is the event that arose after the end of the reporting period, but
provides further evidence of conditions that existed at the end of the reporting
period.

Accounting treatment: financial statements should be adjusted for adjusting

events.

Going concern: If a management indicates after the end of the reporting period
that it intends to liquidate the business or cease trading or there is no other
realistic alternative, then the financial statements should NOT be prepared under
going concern basis.
Non-adjusting event
Non-adjusting event is an event after the reporting period that indicates
conditions arising after the end of the reporting period.

Accounting treatment: do not adjust financial statements for non-adjusting

events. The following disclosure shall be made:

 The nature of the event, and

 An estimate of its financial effect or a statement that such an estimate
cannot be made.

Accounting for dividends: If an entity declares dividends to shareholders after the

end of the reporting period, the entity shall not account for those dividends as for
a liability at the reporting date.

If dividends are declared after the end of the Reporting Period, but before the
financial statements are approved for issue, the dividends are disclosed in the
notes to the financial statements.

Examples related to IAS 10 :

DEF has a receivable towards major client amounting to CU 500 as at 31
December 20X1.

On 10 January 20X2 there is a big fire in the client’s premises and as a result, the
client is not able to pay the full amount to DEF and DEF will suffer a loss of 50%.

How shall this transaction be reported in the financial statements?

Solution:

This is a non-adjusting event, because the credit loss arose as a result of fire
occurring after the end of the reporting period. DEF needs to make
appropriate disclosures in its financial statements.

Handelsgesetzbuch (HGB)

What Is Handelsgesetzbuch (HGB)?

Handelsgesetzbuch (HGB) is a law that governs the primary commercial
code for companies in Germany. The law includes a regulation related
to the preparation of financial statements and establishes accounting
guidelines and best practices.

The commercial code of Germany known as Handelsgesetzbuch was

first established on May 10, 1897. In 1998, the code was adapted to
conform to new laws within the European community. The HGB has
also been used in Austria since 1938. In 2007, the HGB in Austria was
replaced by a newer unified commercial code called the
Unternehmensgesetzbuch (UGB).

Handelsgesetzbuch vs. IFRS

Germany’s commercial code and accounting laws share similarities and

differences with the International Financial Reporting Standards (IFRS).
For example, Germany’s laws and IFRS both use historical costs as the
core of accounting, but Germany law generally does not allow for
revaluations. IFRS allows for the revaluation of the fair value of
property, intangible assets, investment property, equipment and
inventions within set industries. German accounting law offers some
exceptions to the fair value assessment of financial instruments from
banks and financial institutions that are held for trading.

Income statements are largely similar under either set of accounting

laws, but differences do exist. There is no statement of comprehensive
income under German account practices. Income statements can be
issued by using the cost of sales or total cost methods. Furthermore,
income drawn from discounting provisions must be included with other
interest and similar income.

With IFRS, a company can decide to show its income or expenses as a

single statement of comprehensive income or as two statements. The
separate statements can show components of profit or loss plus
another statement for other income.

HGB only requires a statement of cash flows for consolidated financial

statements and for publicly-traded companies that are not required to
file consolidated financial statements. IFRS and German accounting
practices both classify cash flows by operating, investment and
financing activities.
 Refreace:
1- https://www.investopedia.com/terms/h/hgb.asp

2- https://www.ifrsbox.com/ifrs/ias-10/

3- https://www.iasplus.com/en/standards/ias/ias10
July 1977 Exposure Draft E10 Contingencies and Events Occurring After the Balance Sheet Date October 1978 IAS 10 Contingencies and Events Occurring After the Balance Sheet Date effective 1 January 1980 1994 IAS 10 (1978) was reformatted August 1997 Exposure Draft E59 Provisions, Contingent Liabilities and Contingent Assets September 1998 IAS 37 Provisions, Contingent Liabilities and Contingent Assets 1 July 1999 Effective date of IAS 37, which superseded those portions of IAS 10 (1978) dealing with contingencies November  1998 Exposure Draft E63 Events After the Balance Sheet Date May  1999 IAS 10 (1999) Events After the Balance Sheet Date superseded those portions of IAS 10 (1978) dealing with events after the balance sheet date 1 January  2000 Effective date of IAS 10 (1999) 18 December  2003 Revised version of IAS 10 issued by the IASB 1 January  2005 Effective date of IAS 10 (Revised 2003) 6 September 2007 Retitled Events after the Reporting Period as a consequential amendment resulting from revisions to IAS 1
July 1977