“The present was an egg laid
by the past that had the future inside its shell.”
Zora
Neale
Hello!
It’s another
edition of IFRS is easy.
I guess you
would wonder why it took us so long to come up with this edition. It’s actually
for the best. Guess you must have thoroughly digested our previous edition on
IAS 8.
I have heard
people make this statement a good number of times, “It’s no use crying over
spilled milk.”
How true is
this in the world of accounting? Can we touch the past while addressing the
present? Are there situations that can be rectified even after the deed has
been declared done? Even if they can be
rectified, when can they be deemed fit for rectification? What steps should be
taken and how can we manage the damage? Maybe this illustrative story will be
of help.
*Kroon has two horses. He placed loads of equal weight on both
horses, as they embarked on a seemingly long journey. The front horse went
well, but the rear horse was lazy. Kroon began to pile the rear horse’s load on
the front horse; when he had transferred it all, the rear horse found it easy
going, and he laughed at the front horse, saying, “Toil and sweat! The more you
try, the more you have to suffer.” The front horse didn’t care as it moved on
assiduously. When they reached the tavern, the owner said: “Why should I fodder
two horses when I carry all my loads on one? I had better give the front horse
all the food it wants and cut the throat of the other; at least I shall have
the hide.” The rear horse pleaded but it was too late. The decision had already
been made. (Edited
excerpt from the 48 Laws of Power, by Robert Greene)
Yea, the
decision had already been made. In the world of accounting, just as the lazy
horse’s plea fell on deaf ears, it is generally believed by lay-men that
financial statements prepared by the financial year end are sacred and cannot
be adjusted even when some crucial events occur after the year end. It is
almost true but not totally true.
A
window-period is allowed which we refer to as the cut-off period. During this
period some specific nature of events are allowed to find their way into the
financial statement even though they arose after all deeds have been done, that
is, after the financial statements have been deemed to be completely prepared.
IAS 10
proffers justice to this worrisome aspect of preparing financial statements.
For
a complete dosage, detailed examples and better clarification on the subject
matter of IAS 10 –Events after the reporting period, , click below to view or
download the pdf.
I hope our
blog post has immensely been of help. You can also help us by dropping your
comments, opinions and questions in the comment box.
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Please I can't download the pdf
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