Key Differences Between Ind AS 10 and AS 4 in Post-Balance Sheet Events

CA Rakesh Ishi , Last updated: 01 January 2024
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1. Disclosure of Material Non-Adjusting Events

Ind AS 10: Requires the disclosure of material non-adjusting events directly in the financial statements.
AS 4: Mandates the disclosure of such events in the report of the approving authority, indicating a shift towards more transparency in financial reporting under Ind AS 10.

Key Differences Between Ind AS 10 and AS 4 in Post-Balance Sheet Events

2. Treatment of Dividend Proposed or Declared After the Reporting Period

Ind AS 10: Dividend proposed or declared after the reporting period is not recognized as a liability. Instead, it is disclosed in the notes to the financial statements (Ind AS 1).
AS 4: Recognizes such dividends as liabilities due to earlier regulatory requirements, showcasing the influence of regulatory changes on accounting treatments.

3. Going Concern Assumption

Ind AS 10: If the going concern assumption is no longer appropriate after the reporting date, it requires a fundamental change in the basis of accounting. Ind AS 1 mandates specific disclosures about the basis on which financial statements are prepared.
AS 4: Adjusts assets and liabilities for events after the balance sheet date indicating a lack of going concern. The requirement for explicit disclosures about the going concern assumption is absent in AS 4.

4. Treatment of Breach of Material Provision of a Long-Term Loan Arrangement

Ind AS 10: Considers a breach of a material provision of a long-term loan arrangement as an adjusting event if the lender agrees to waive the breach before financial statement approval.
AS 4: Does not specifically address the treatment of a breached long-term loan arrangement as an adjusting event, reflecting a more detailed approach in Ind AS 10.

5. Appendix on Distribution of Non-Cash Assets in Ind AS 10

Ind AS 10: Includes an appendix that provides guidance on recognizing dividends payable to owners, particularly concerning the distribution of non-cash assets.
AS 4: Lacks a specific appendix on the distribution of non-cash assets, highlighting the additional guidance in Ind AS 10.

Conclusion

The transition from AS 4 to Ind AS 10 brings forth a series of changes, emphasizing enhanced transparency, detailed treatment of specific events, and alignment with regulatory shifts. As businesses adapt to these changes, understanding these differences becomes crucial for accurate financial reporting and compliance with the evolving accounting standards landscape.