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Accounting Principles: Events After the Balance Sheet Date - Essay Example

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Author : jonathonwolff

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This area of accounting standards is related to events, both favourable and unfavourable, that occur after the financial statements are prepared and are relevant to the contents of the financial statements…

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Accounting Principles: Events After the Balance Sheet Date

This area of accounting standards is related to events, both favourable and unfavourable, that occur after the financial statements are prepared and are relevant to the contents of the financial statements. This paper examines some key elements of IAS 10. It begins by identifying the background and basis for the Accounting Standard, and goes on to identify its practical application, and in so doing, identifies some key components of Events after Balance Sheet Date. The paper also reports comparative analyses between the IAS and the US Generally Accepted Accounting Practice (GAAP). Background of IAS 10 Generally, accounts are prepared over a period of 12 months (Accounting Coach, 2011). However, in practice, the people who are ultimately responsible for the accounts are the board of directors (Accounting Coach, 2012). Therefore, the authorization of the accounts by the board of directors is the most important validation point of the financial statement prepared by the accounting department. In most situations, accounts are authorized two to three months after the end of the period. It is typical that accounts prepared for December in a given year will be authorized in February or March by the board of directors. The International Accounting Standards Board emphasizes the need for cut-offs and consistency in financial statements (2009). ...
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