Accounting for post balance sheet events

Statement of standard accounting practice No. 17.
August 1980
Accounting for post
balance sheet events

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ACCOUNTING FOR POST BALANCE SHEET EVENTS
Date from which effective
The accounting practices set out in this statement should be adopted as soon as
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possible and regarded as standard in respect of financial statements relating to
accounting periods beginning on or after 1st September 1980.
Part 4 – Compliance with International Accounting
Standard No. 10 ‘Contingencies and events
occurring after the balance sheet date’
The requirements of International Accounting Standard No. 10 ‘Contingencies and
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events occurring after the balance sheet date’ concerning post balance sheet events
accord very closely with the content of the United Kingdom and Irish Accounting
Standard No. 17 ‘Accounting for post balance sheet events’ and accordingly com-
pliance with SSAP17 will ensure compliance with IAS10 in all material respects so far
as post balance sheet events are concerned.
Appendix
This appendix is for general guidance and does not form part of the statement of
standard accounting practice. The examples are merely illustrative and the lists are not
exhaustive.
The examples listed distinguish between those normally classified as adjusting events
and as non-adjusting events. However, in exceptional circumstances, to accord with
the prudence concept, an adverse event which would normally be classified as non-
adjusting may need to be reclassified as adjusting. In such circumstances, full
disclosure of the adjustment would be required.
Adjusting events
The following are examples of post balance sheet events which normally should be
classified as adjusting events:
(a) Fixed assets. The subsequent determination of the purchase price or of the
proceeds of sale of assets purchased or sold before the year end.
(b) Property. A valuation which provides evidence of a permanent diminution in
value.
(c) Investments. The receipt of a copy of the financial statements or other inform-
ation in respect of an unlisted company which provides evidence of a permanent
diminution in the value of a long-term investment.
(d) Stocks and work in progress.
(i) The receipt of proceeds of sales after the balance sheet date or other
evidence concerning the net realisable value of stocks.
(ii) The receipt of evidence that the previous estimate of accrued profit on a
long-term contract was materially inaccurate.
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STATEMENTS OF STANDARD ACCOUNTING PRACTICE
(e) Debtors. The renegotiation of amounts owing by debtors, or the insolvency of a
debtor.
(f) Dividends receivable. The declaration of dividends by subsidiaries and associated
companies relating to periods prior to the balance sheet date of the holding
company.
(g) Taxation. The receipt of information regarding rates of taxation.
(h) Claims. Amounts received or receivable in respect of insurance claims which
were in the course of negotiation at the balance sheet date.
(i) Discoveries. The discovery of errors or frauds which show that the financial
statements were incorrect.
Non-adjusting events
The following are examples of post balance sheet events which normally should be
classified as non-adjusting events:
(a) Mergers and acquisitions.
(b) Reconstructions and proposed reconstructions.
(c) Issues of shares and debentures.
(d) Purchases and sales of fixed assets and investments.
(e) Losses of fixed assets or stocks as a result of a catastrophe such as fire or flood.
(f) Opening new trading activities or extending existing trading activities.
(g) Closing a significant part of the trading activities if this was not anticipated at the
year end.
(h) Decline in the value of property and investments held as fixed assets, if it can
be demonstrated that the decline occurred after the year end.
(i) Charges in rates of foreign exchange.
(j) Government action, such as nationalisation.
(k) Strikes and other labour disputes.
(l) Augmentation of pension benefits.

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