Skip to main navigation

US GAAP vs. IFRS: the basics, March 2010 - Subsequent events - Ernst & Young - United States

US GAAP vs. IFRS: the basics, March 2010

Subsequent events

Similarities

Despite differences in terminology, the accounting for subsequent events under ASC 855 Subsequent Events (formerly FAS 165) and IAS 10 Events after the Reporting Period is largely similar.

An event that occurs during the subsequent events period that provides additional evidence about conditions existing at the balance sheet date usually results in an adjustment to the financial statements.

If the event occurring after the balance sheet date but before the financial statements are issued relates to conditions that arose subsequent to the balance sheet date, the financial statements are not adjusted, but disclosure may be necessary in order to keep the financial statements from being misleading.

Significant differences


US GAAPIFRS
Date through which subsequent events must be evaluatedSubsequent events are evaluated through the date the financial statements are issued or available to be issued. Financial statements are considered issued when they are widely distributed to shareholders or other users in a form that complies with US GAAP. For SEC registrants, financial statements are issued when the financial statements are filed with the SEC. Financial statements are considered available to be issued when they are in a form that complies with US GAAP and all necessary approvals have been obtained. SEC registrants and conduit-bond obligors evaluate subsequent events through the date the financial statements are issued, while all other entities evaluate subsequent events through the date that the financial statements were available to be issued.Subsequent events are evaluated through the date that the financial statements are “authorized for issue.” Depending on an entity’s corporate governance structure and statutory requirements, authorization may come from management or a board of directors. Most US entities do not have a similar requirement.
Reissuance of financial statementsIf the financial statements are reissued, events or transactions may have occurred that require disclosure in the reissued financial statements to keep them from being misleading. However, an entity cannot recognize events occurring between the time the financial statements were issued or available to be issued and the time the financial statements were reissued unless the adjustment is required by US GAAP or regulatory requirements (for example, stock splits, discontinued operations, or the effect of adopting a new accounting standard retrospectively would give rise to an adjustment). Entities must disclose both the date that the financial statements were originally issued and the date that they were reissued if the financial statements were revised due to an error correction or retrospective application of US GAAP.IAS 10 does not specifically address the reissuance of financial statements and recognizes only one date through which subsequent events are evaluated, that is, the date that the financial statements are authorized for issuance, even if they are being reissued. If financial statements are reissued, the date the reissued statements are authorized for reissuance is disclosed. As a result, only one date will be disclosed with respect to the evaluation of subsequent events, and an entity could have adjusting subsequent events in reissued financial statements.
Short-term loans refinanced with long-term loans after balance sheet dateShort-term loans are classified as long-term if the entity intends to refinance the loan on a long-term basis and, prior to issuing the financial statements, the entity can demonstrate an ability to refinance the loan.Short–term loans refinanced after the balance sheet date may not be reclassified to long-term liabilities.
Stock dividends declared after balance sheet dateFinancial statements are adjusted for a stock dividend declared after the balance sheet date.Financial statements are not adjusted for a stock dividend declared after the balance sheet date.

Convergence

No further convergence is planned at this time.

Back to top