Post-reporting-period events that provide further evidence about conditions existing at the reporting date and therefore require statement adjustment.
Adjusting events are events identified after the reporting date that provide additional evidence about conditions that already existed at that reporting date. Because they clarify the original situation rather than create a new one, they require changes to the financial statements.
They matter because statement users need the period-end numbers to reflect the best available evidence about conditions that were already present when the period closed.
An adjusting event changes the understanding of a balance, estimate, or obligation that already existed at the reporting date.
Typical examples include:
evidence that a receivable was already impaired at period end
settlement of a lawsuit confirming an existing obligation
later information confirming asset impairment conditions already in place
Adjusting events lead to updated statement figures.
Non-adjusting events may require disclosure, but they do not restate the period-end numbers if they relate to conditions that arose later.
Post-Balance-Sheet Events: The broader category that includes both adjusting and non-adjusting events.
Non-Adjusting Events: Later events that do not provide evidence about period-end conditions.
Balance-Sheet Date: The date against which the event is assessed.