Month End Glossary

Subsequent Event

A subsequent event refers to an occurrence or transaction that takes place after the end of an accounting period but before the financial statements for that period are issued or available for use.

A subsequent event is a transaction or occurrence that happens after the reporting period has ended but before the financial statements are finalized and released. For instance, if a company experiences a major fire at one of its warehouses after its fiscal year-end but prior to when the financial statements are issued, this would be a subsequent event. These events are of interest to accountants and auditors because they can provide additional information about the conditions that existed at the reporting date or introduce new conditions that need to be disclosed.

There are two types of subsequent events: those that provide evidence of conditions that existed at the balance sheet date, which require adjustments to the financial statements, and those that arise after the balance sheet date, which might require disclosure if they are significant. For example, a debtor of a company declaring bankruptcy after the year-end can be an adjusting event if the finanical difficulties of the debtor existed already at the year-end. On the other hand, an event such as a natural disaster, occurring after year-end, would typically be a non-adjusting event but may need disclosure if material.

Accounting standards such as IAS 10 'Events after the Reporting Period' and guidelines in the U.S. GAAP provide policies regarding how to treat subsequent events in financial statements.

Related Terms

Make your next Month End easy.
Start your free trial today.

Your first Month End free. We’ll import your existing checklist. It’s 2025 - time to get control of your Month End close process!