Subsequent events (also called events after balance sheet date) can be defined as the events that occur after the balance sheet date but before the authorization of financial statements for issue.
Under IFRS they are termed as 'events after the reporting period' and are also commonly called 'events after the balance sheet date' and the accounting treatment is prescribed by IAS 10 Events After the Reporting Period.
Date of Financial Statements
The date of the financial statements is the balance sheet date (i.e. it is the point of time to which a balance sheet relates. For example, if a balance sheet is prepared to show the assets, liabilities and equity of a company as at 31 December 2011 then 31 December 2011 is the date of the financial statements.
Date of Authorization of Financial Statements for Issue
Financial statements are authorized for issue when they are authorized for issue by those charged with governance and control which is normally the board of directors.
If financial statements are to be approved by the shareholders in their meeting they are deemed authorized for issue when the board of directors authorizes them for issue to shareholders. If the financial statements are to be approved by a supervisory board consisting solely of non-executives, they are deemed issued when they are presented to the supervisory board by the management.
SE Ltd. is preparing its financial statement for the year ended 31 December 2011. The financial statements are to be reviewed and approved by the board of directors on 15 February 2012. The financial statements are to be approved by the shareholders in their annual general meeting to be held on 1 March 2012.
All events taking place after 31 December 2011 but before 15 February 2012 are to be deemed subsequent events (or events after the reporting period). The date financial statements are issued is the date when the board of directors authorizes them for issue to the shareholders. Events after 15 February 2012 are irrelevant for the financial statements for the year ended 31 December 2011.
There are two types of events after the balance sheet date: adjusting events (also known as recognized subsequent events under US GAAP) and non-adjusting events (non-recognized subsequent events).