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A finance manager at a mid-market manufacturing company is closing FY 2025-26 in April 2026. The trial balance is finalised on 20 April; the board meeting to approve the audited financial statements is scheduled for 15 August. On 15 April a customer with a Rs 12 lakh receivable that was already 240 days overdue at 31 March files for insolvency under the IBC. On 15 May a fire in the finished-goods warehouse destroys Rs 8 crore of inventory. On 20 May a long-running commercial-court dispute settles for Rs 90 lakh in the company's favour — the counterparty accepts the demand notice. The controller has to decide, for each of the three events between 1 April and 15 August, whether to adjust the FY 2025-26 financial statements, add a note to the accounts, or leave the event for FY 2026-27. Getting the classification wrong on any of the three is what a Section 143(3) scrutiny query or a CARO 2020 comment in the audit report will surface six months later — with a materially different consequence depending on whether the misclassification overstates or understates the FY 2025-26 numbers.
Ind AS 10 paragraph 3 defines two types of events after the reporting period. Adjusting events provide evidence of conditions that existed at the reporting date — the entity adjusts the amounts recognised in the financial statements. Non-adjusting events indicate conditions that arose after the reporting date — the entity does not adjust the amounts but discloses the nature and financial effect if the event is material. The cutoff for both is the date the board approves the financial statements for issue, under paragraph 4. Section 143(3)(i) of the Companies Act 2013 requires the auditor to report on the operating effectiveness of internal financial controls with reference to financial statements — the subsequent-events review is one of the entity-level controls that pervades every process-level control. Form 3CD Clause 30 requires the tax auditor to report events with a material bearing on the tax position of the assessee, treating the subsequent-events register as a working-paper input for the September or October upload. Regulation 30 of SEBI LODR requires listed entities to disclose material events to the stock exchange within 30 minutes of a board meeting decision, 12 hours from an internal event, or 24 hours from an external event — on a clock independent of the Ind AS 10 accounting treatment.
A subsequent-events register maintained from 1 April onwards through the date of board approval, with columns for date of event, description, pre-existing-condition evidence, Ind AS 10 classification (adjusting or non-adjusting), amount, Companies Act 2013 Section 143(3)(i) ICFR control reference, Form 3CD Clause 30 tax reporting flag, and SEBI LODR Regulation 30 disclosure timeline where the entity is listed. A named controller as the owner of the register with a fortnightly review through the April-to-August window. A working-paper trail for every adjusting-event classification carrying the evidence that the underlying condition existed at 31 March 2026. A separate compliance-team owner for the Regulation 30 clock on listed entities, running in parallel with the accounting classification. A cutoff meeting on the eve of the board meeting to review the closing state of the register with the CA before the FY 2025-26 statements are locked.
The three-event illustration resolves cleanly. The Rs 12 lakh customer bankruptcy on 15 April is an adjusting event — the receivable was 240 days overdue at 31 March, the insolvency condition existed at year-end, the FY 2025-26 books carry a Rs 12 lakh provision. The Rs 8 crore factory fire on 15 May is a non-adjusting event — the fire itself is the condition and it did not exist at year-end, the FY 2025-26 books stay unchanged and a note to accounts discloses the nature and Rs 8 crore financial effect. The Rs 90 lakh commercial-court settlement on 20 May is an adjusting event — the underlying dispute existed at 31 March and the settlement confirms a pre-existing recoverable (or liability), the FY 2025-26 books recognise the amount. On a listed entity, the fire and the settlement also trigger Regulation 30 disclosures to the stock exchange on the 24-hour or 30-minute clock. The subsequent-events register is signed off by the controller before the 15 August board meeting, the CA cross-references every adjusting classification against the working-paper evidence, and the Section 143(3)(i) ICFR control on subsequent-events review is documented as operating effectively for the year.
The 31 March trial balance is closed. The CA is booked to start the field walk in early August. In between, a customer files for insolvency on 15 April, a warehouse fire on 15 May destroys Rs 8 crore of finished goods, and a long-running commercial-court dispute settles for Rs 90 lakh on 20 May. All three land before the 15 August board meeting. The finance manager wants to know which of them belong in the FY 2025-26 financial statements, which get a note, and which get nothing.
The answer is not chronological. Ind AS 10 does not care that all three events happened after 31 March — it cares whether the underlying condition existed at 31 March. Getting the classification right is a Companies Act 2013 Section 143(3)(i) internal-financial-controls question, a Form 3CD Clause 30 tax-audit question, and — for a listed entity — a SEBI LODR Regulation 30 disclosure question, all on different clocks.
The quick answer
Ind AS 10 Events after the Reporting Period splits every post-year-end event into two buckets. Adjusting events provide evidence of conditions that existed at the reporting date — the amounts in the financial statements are adjusted. Non-adjusting events indicate conditions that arose after the reporting date — the amounts are not adjusted, but material events are disclosed in the notes with a description and a financial-effect estimate. The cutoff for both is the date the board approves the financial statements for issue.
On the illustration — the Rs 12 lakh customer insolvency on 15 April adjusts the FY 2025-26 books because the receivable was already 240 days overdue at 31 March and the insolvency condition pre-existed. The Rs 8 crore warehouse fire on 15 May is disclosed as a note but not adjusted, because the fire itself is the condition and it did not exist at year-end. The Rs 90 lakh commercial-court settlement on 20 May adjusts the FY 2025-26 books because the underlying dispute existed at 31 March and the settlement confirms a pre-existing amount.
Rule 1 — the test is the condition, not the date
Ind AS 10 paragraph 3 is unusually clean. Every event between the reporting date and the board-approval date is either adjusting or non-adjusting, and the sole test is whether the event provides evidence of a condition that existed at the reporting date. The calendar date of the event itself is irrelevant to the classification.
The traps show up on the borderline cases. A customer default on 20 April where the customer was 240 days overdue at 31 March is adjusting — the insolvency condition existed. A customer default on 20 April where the customer was current at 31 March and the trigger was a fresh April event (a fire at their premises, a sudden order cancellation from their principal, a mid-April regulatory action) is non-adjusting — the condition did not exist at year-end. The two look identical on the calendar but sit on opposite sides of the Ind AS 10 test.
Illustrative arithmetic on the three events. Rs 12 lakh customer bankruptcy on 15 April — the receivable was 240 days overdue at 31 March, insolvency indicators (delayed payments, cheque bounces, RBI defaulters list flag) existed before year-end. The 15 April filing is post-year-end evidence of a pre-year-end condition. FY 2025-26 books recognise a Rs 12 lakh provision under Ind AS 109 expected-credit-loss treatment, and the controller documents the pre-existing evidence in the working paper the CA will trace.
Rule 2 — a fire, a merger, a new business — non-adjusting even when huge
The largest events are often the ones that get the note-only treatment. A warehouse fire on 15 May destroys inventory that was intact at 31 March. A business combination announced on 5 June acquires a target that was independent at 31 March. A restructuring plan approved by the board on 25 July affects operations that were running normally at 31 March. In each case the condition — the fire, the acquisition, the restructuring — is a post-year-end event, so the FY 2025-26 books stay unchanged.
That does not make the disclosure optional. Ind AS 10 paragraph 21 requires disclosure of the nature of any material non-adjusting event and either an estimate of its financial effect or a statement that such an estimate cannot be made. A Rs 8 crore inventory loss from a 15 May fire is unambiguously material for most mid-market manufacturers — the note to accounts describes the fire, the finished-goods inventory affected, the insurance recovery status, and the Rs 8 crore financial effect at gross, with the net-of-insurance figure once the insurer’s assessment is available.
For a listed entity, the same fire also triggers a SEBI LODR Regulation 30 disclosure to the stock exchange within 24 hours of the fire (an event not emanating from within the listed entity). That disclosure is completely separate from and additional to the Ind AS 10 note in the annual report — the exchange disclosure lands in May, the annual-report note lands in August or September.
Rule 3 — a court settlement confirming a pre-existing dispute is adjusting
The commercial-court settlement on 20 May illustrates the third pattern. The dispute existed at 31 March — an old counterparty claim that had been running for four years, disclosed as a contingent liability in the FY 2024-25 financial statements at a range of Rs 60 lakh to Rs 1.2 crore. On 20 May the counterparty accepts a Rs 90 lakh demand notice. The settlement is post-year-end but it provides evidence of the amount of a condition that existed at 31 March. Under Ind AS 10 paragraph 9(a), a court order or settlement received after the reporting period that confirms a present obligation existing at the reporting date is an adjusting event — a contingent liability disclosed in FY 2024-25 becomes a Rs 90 lakh provision recognised in FY 2025-26.
Symmetrically, a court order confirming an amount receivable by the company (an insurance claim admitted, a customer arbitration decided in the company’s favour) is also adjusting — the receivable is booked in FY 2025-26 rather than left as a contingent asset. The same statutory audit reconciliation checklist for India that surfaces the CARO 2020 questions on cash generation also carries the subsequent-events working paper the CA will cross-reference against the court-order register.
Rule 4 — the board-approval date is the hard cutoff
Ind AS 10 paragraph 4 fixes the reporting period at the date the board of directors approves the financial statements for issue. An event on 14 August 2026 (a day before the illustration’s 15 August board meeting) is inside the Ind AS 10 window and requires classification. An event on 16 August 2026 is outside it, and belongs to the FY 2026-27 assessment even if the board has not yet released the statements to the shareholders.
Two caveats worth flagging on the cutoff. First, if a post-approval event is so material that it affects the going-concern assumption used to prepare the approved statements themselves — a large insolvency proceeding filed against the company, a regulatory order revoking the operating licence — the board may need to withdraw the approval, revise the statements under the going-concern override in paragraph 14, and re-approve. Second, if the entity is listed, the Regulation 30 SEBI LODR disclosure clock runs independently of the Ind AS 10 clock and does not care about the board-approval date at all — a material event on 16 August still requires exchange disclosure inside 12 or 24 hours regardless of which accounting period it falls into.
Rule 5 — the ICFR, tax audit, and SEBI LODR overlays
The subsequent-events review is not a one-page Ind AS 10 exercise. Three separate frameworks read the same register with different lenses.
Section 143(3)(i) of the Companies Act 2013 requires the statutory auditor to report on the operating effectiveness of internal financial controls with reference to financial statements. The subsequent-events review is an entity-level ICFR control that pervades every process-level control — the ICAI Guidance Note on Audit of Internal Financial Controls Over Financial Reporting names it explicitly. A missing subsequent-events register, or a register with gaps between April and August, is a design deficiency the ICFR audit will flag under Section 143(3)(i). The ICFR reconciliation walkthrough covers the deeper process-level treatment.
Form 3CD Clause 30 in the tax audit report requires the tax auditor to report events with a material bearing on the tax position of the assessee. A post-year-end court order that changes the deductibility of an FY 2025-26 expense, a customer bankruptcy that converts a bad debt provision from disallowable to allowable under Section 36(1)(vii), a settlement that unwinds an earlier Section 40(a)(ia) TDS disallowance — each is a Clause 30 input that has to be captured before the September or October Form 3CD upload. Missing an adjusting event in the tax audit is what surfaces as a Section 143(3) scrutiny query in a subsequent assessment cycle.
SEBI LODR Regulation 30 applies only to listed entities. Every material event after 31 March triggers a stock-exchange disclosure inside 30 minutes (board decisions), 12 hours (internal events), or 24 hours (external events) of occurrence — completely separate from the Ind AS 10 accounting treatment in the annual report. A listed entity’s subsequent-events register carries a Regulation 30 flag column alongside the Ind AS 10 classification column, with a compliance-team owner on the Regulation 30 clock and a controller owner on the Ind AS 10 clock.
The one to escalate first — the borderline adjusting classifications
The single largest driver of a subsequent-events comment in the audit report is a misclassified adjusting event — either an event that was booked as adjusting where the underlying condition actually arose after year-end (overstating the FY 2025-26 provision) or an event that was left as non-adjusting where a pre-existing condition can be evidenced (understating the FY 2025-26 provision). The controller review should route the borderline classifications — the 15-day-post-year-end customer defaults, the settlements of long-running disputes with a range rather than a fixed amount, the inventory obsolescence confirmed by post-year-end sales below cost — to the top of the queue for evidence documentation.
The escalation ladder is reverse-calculated from the board meeting. If the board meets on 15 August, the subsequent-events register needs to be closed by 8 August at the latest so the CA can trace the working-paper evidence during the field walk. The CA needs three weeks — call it a 20 July close on the register — to complete the walkthrough on a mid-market business. The register itself should be updated in real time from 1 April onwards, not retrofitted on 15 July.
When the manual register stops holding
A small company with a single reporting entity, a linear counterparty base, and a straightforward litigation portfolio can hold the subsequent-events register on a single spreadsheet — date of event, description, pre-existing-condition evidence, Ind AS 10 classification, amount, and controller sign-off column. The CA reviews the sheet in early August and cross-references against the working-paper file.
A mid-market company with multiple subsidiaries under a consolidated Ind AS reporting boundary, a mixed customer base spanning both healthy and financially stressed accounts (where the pre-existing-condition test is a case-by-case judgement rather than a bright line), a running litigation portfolio with a dozen open commercial-court matters, and — where listed — a SEBI LODR Regulation 30 clock alongside the accounting classification, is running a rolling classification exercise that a spreadsheet cannot hold reliably through the April-to-August window. The exposure is not the current-year misclassification alone — it is the compounding of misclassified events into a three-year audit history that a Section 143(3)(i) ICFR review will surface in the following cycle.
At that scale, moving the subsequent-events register and the working-paper evidence trail onto continuously refreshed detection — where Terra Insight’s reconciliation software for India treats the customer-receivable-ageing feed, the litigation-provision feed, and the fixed-asset-impairment feed as first-class monthly outputs that flow directly into the subsequent-events classification — is what keeps the register defensible against a CARO 2020 comment in the audit report. Below that scale, the one-page register plus the through-the-year statutory audit checklist is the right tool.
Go deeper
- Statutory audit reconciliation checklist for India — the through-the-year discipline
- CARO 2020 bank reconciliation audit — the paragraph 3(vi) treatment
- Why CARO 2020 is flagging your bank reconciliation in the audit report — the sibling walkthrough
- Statutory audit preparation kit — the downloadable working paper
- Reconciliation software for India
Frequently Asked Questions
How do I tell an adjusting event from a non-adjusting event when the trigger sits somewhere in between?
The test in Ind AS 10 paragraph 3 is not the calendar date of the event — it is whether the event provides evidence of conditions that existed at the reporting date. A customer bankruptcy filed on 15 April 2026 for a customer whose Rs 12 lakh receivable was already 240 days overdue at 31 March 2026 is an adjusting event because the insolvency condition existed at year-end and the bankruptcy filing merely confirms it — the receivable is written down in the FY 2025-26 books. A factory fire on 15 May 2026 is a non-adjusting event because the fire itself is the condition and it did not exist at 31 March 2026 — the loss is disclosed as a note to accounts but not adjusted in the FY 2025-26 numbers. The edge case is a customer default on 15 April where the customer was current at 31 March and the bankruptcy trigger was a fresh event in April — that is non-adjusting, and misclassifying it as adjusting overstates the FY 2025-26 provision. The controller should document the pre-existing-condition evidence for every event pulled onto the adjusting list, in a working paper the auditor can trace.
The board meeting to approve the financial statements is on 15 August. If a material event happens on 20 August, does it need to be considered?
No. Ind AS 10 paragraph 4 defines the cutoff as the date the board of directors approves the financial statements for issue — 15 August in the illustration. An event on 20 August is outside the reporting period covered by Ind AS 10 for FY 2025-26 and will be considered against FY 2026-27 instead. But two caveats. First, if the event on 20 August is so material that it affects the going-concern assumption used to prepare the FY 2025-26 statements themselves, the board may need to withdraw the approval, revise the statements, and re-approve — the going-concern override sits in Ind AS 10 paragraph 14. Second, if the entity is listed, the Regulation 30 SEBI LODR disclosure clock runs independently of the Ind AS 10 clock — the 30-minute post-board-meeting timeline applies to board decisions on the material event, and the 24-hour timeline applies to material events not emanating from within the entity. The Ind AS 10 cutoff closes the accounting question, not the disclosure question.
Do the same rules apply to a private limited company that files under AS 4 rather than Ind AS 10?
Broadly yes, with two operational differences worth flagging. AS 4 (Revised) is the applicable standard for entities that continue to prepare accounts under the Companies (Accounting Standards) Rules 2021 — non-Ind-AS private companies below the specified turnover and net-worth thresholds. The adjusting-versus-non-adjusting principle in AS 4 mirrors Ind AS 10 after the 2016 revision that aligned the treatment of proposed dividends. First difference — AS 4 uses the phrase ‘events occurring after the balance sheet date’ and the definitional cutoff is the date the board approves the financial statements, same as Ind AS 10. Second difference — the disclosure requirement for a non-adjusting event under AS 4 is narrower than under Ind AS 10 (which requires nature, financial effect estimate, or a statement that no estimate can be made). A private company transitioning from AS 4 to Ind AS on crossing the Rs 250 crore net-worth threshold should update the subsequent-events working paper template on the transition rather than carry forward the AS 4 disclosure format.
The tax auditor is asking for a subsequent-events register for Form 3CD Clause 30. What should be on it?
The subsequent-events register the tax auditor needs is a chronological list of every material event between 1 April and the date of the tax audit report (typically August or September of the assessment year), classified into three columns. Column 1 is the adjusting events under Ind AS 10 that have already been folded into the FY 2025-26 books — receivable write-downs from post-year-end customer bankruptcies with pre-existing insolvency indicators, court settlements confirming pre-existing liabilities, inventory obsolescence confirmed by post-year-end sale below cost. Column 2 is the non-adjusting events that are disclosed in the notes but not adjusted — factory fire, merger announcement, business combination, restructuring plan announced after year-end. Column 3 is events with a specific tax-position bearing that require separate reporting under Clause 30 or a related Form 3CD clause — for example, a post-year-end court order that changes the deductibility of an FY 2025-26 expense. Missing an adjusting event in the tax audit walkthrough is what surfaces as a Section 143(3) scrutiny query in a subsequent assessment cycle.
The listed entity had a Rs 90 lakh commercial-court settlement on 20 May, before the 15 August board meeting. Is this a Regulation 30 disclosure event as well as an Ind AS 10 event?
Yes to both, on separate clocks. Under Ind AS 10, if the underlying dispute existed at 31 March 2026 (it did — the settlement confirms a pre-existing liability), the Rs 90 lakh is an adjusting event and gets recognised as a provision in the FY 2025-26 financial statements approved on 15 August. Under Regulation 30 of SEBI LODR, the settlement itself is a material event that occurred on 20 May and needs to be disclosed to the stock exchange within the applicable timeline — 30 minutes from the board meeting if the board’s decision was to accept the settlement, 24 hours from the occurrence if the settlement was accepted at an operational level and the board is only being informed later. The two disclosures serve different audiences and different frameworks — the exchange disclosure alerts investors within hours, the Ind AS 10 adjustment lands in the annual report three-plus months later. A listed entity should have a subsequent-events register that runs both classifications in parallel from 1 April onwards, with a compliance-team owner for the Regulation 30 clock and a controller owner for the Ind AS 10 clock.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Ind AS 10, Events after the Reporting Period — Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors in case of a company, and by the corresponding approving authority in case of any other entity, for issue. Two types of events can be identified — those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period), and those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period). An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period. An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. If non-adjusting events after the reporting period are material, non-disclosure could influence the economic decisions of users taken on the basis of the financial statements — the entity shall disclose the nature of the event, and an estimate of its financial effect, or a statement that such an estimate cannot be made.
- ▸ AS 4 (Revised), Contingencies and Events Occurring After the Balance Sheet Date — Events occurring after the balance sheet date are those significant events, both favourable and unfavourable, that occur between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and by the corresponding approving authority in the case of any other entity. Assets and liabilities should be adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date. Dividends declared by an enterprise after the balance sheet date but before approval of the financial statements are no longer required to be adjusted (post the 2016 amendment aligning AS 4 with Ind AS 10) — such dividends are disclosed in the notes. AS 4 (Revised) applies to entities that continue to prepare accounts under the Companies (Accounting Standards) Rules 2021 rather than under Ind AS notified via the Companies (Indian Accounting Standards) Rules 2015.
- ▸ Section 143(3)(i), Companies Act 2013 — The auditor's report shall also state whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls. Internal financial controls with reference to financial statements include, among other things, controls over the identification, evaluation, and disclosure of events occurring between the balance sheet date and the date of approval of the financial statements — the subsequent-events control. A missing or weak subsequent-events review, where a material event between 1 April and the board meeting date is not captured in the reconciliation working paper, is a design deficiency that the ICFR auditor is required to report on. The Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by ICAI treats subsequent-events review as an entity-level control that pervades every process-level control.
- ▸ Form 3CD Clause 30, Income-tax Rules 1962 — Clause 30 of Form 3CD requires the tax auditor to report details of any amount borrowed on hundi or repayment of the amount due thereon otherwise than through an account payee cheque, and separately covers reporting on events occurring after the reporting period that have a material bearing on the tax position of the assessee. The Form 3CD walkthrough treats the subsequent-events register as a working-paper input — every material adjusting event between 31 March and the date of the tax audit report (typically August or September of the assessment year) needs to be captured in the current-year computation, and every non-adjusting event needs to be tagged for the assessment year that follows. Missing an adjusting event in the tax audit walkthrough is what surfaces as a Section 143(3) scrutiny query in the subsequent assessment cycle.
- ▸ SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, Regulation 30 — Every listed entity shall make disclosures of any events or information which, in the opinion of the board of directors of the listed entity, is material. The events specified in Para A of Part A of Schedule III shall be deemed to be material events and the listed entity shall make disclosure of such events. The listed entity shall first disclose to stock exchange(s) of events or information as soon as reasonably possible and not later than the following — thirty minutes from the closure of the meeting of the board of directors in which the decision pertaining to the event or information has been taken; twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity; twenty-four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity. A subsequent event that qualifies as material under Schedule III triggers a Regulation 30 disclosure to the stock exchange within the specified timeline — separately from and in addition to the Ind AS 10 treatment in the financial statements.