Events After Balance Sheet Date (AS 4): Adjust or Disclose

Events after year end: AS 4 — SignReady guide

In this guide · 10 sections

What is left of AS 4, and the three cut-off dates
The test: adjust or disclose
Decision table: 14 events after the year end
Worked adjusting entry: customer insolvency
Proposed dividend: the current position
When the event goes to going concern
Sample wording
The auditor's procedures and a checklist for the days before signing
FAQs
Sources

Key points

AS 4 covers events between the balance sheet date and the date the Board approves the statements, not the AGM date. SA 560 runs further, to the date of the auditor's report.
Adjust when the event gives more evidence of a condition that existed at the balance sheet date, or shows that going concern is no longer appropriate (para 13). Do not adjust when the condition arose later (para 8.3).
Under AS 4 a material non-adjusting event is disclosed in the Board's report (paras 15 and 17; section 134(3)(l)), with its nature and an estimated financial effect. The notes are not the place AS 4 names, though a short note is often added as well.
A dividend declared after the year end is not a liability at the year end unless a statute requires it (para 14). It goes in the notes, and Schedule III (General Instruction 6U) asks for the amount proposed and the amount per share.
The auditor covers the period to the report date (SA 560 paras 6 and 7), obtains a written representation on subsequent events (para 9; SA 580) and asks again about going concern (SA 570).

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The Board meeting is on Thursday. On Monday the client's accountant mentions that the largest debtor went into insolvency in June, the godown had a fire in July, and the bank has sanctioned a new term loan. The statements are already drafted to 31 March. Which of these changes the figures, which goes in the Board's report, and which needs nothing at all? This guide gives the test, a decision table of real events, a worked entry, sample wording and a checklist for the days before signing. Law and standards as at 31 October 2026; figures are illustrative. It covers Division I companies under the Companies (Accounting Standards) Rules, 2021; Ind AS companies follow Ind AS 10, which is not covered here.

What is left of AS 4, and the three cut-off dates

AS 4 is still titled "Contingencies and Events Occurring After the Balance Sheet Date", but the opening note to AS 29 withdraws its contingency paragraphs (1(a), 2, 3.1, 4, 5, 6, 7, the relevant part of 9.1, 9.2, 10, 11, 12 and 16), except where they deal with impairment of assets not covered by another standard. A footnote to AS 4 gives the example that matters most: impairment of receivables, the provision for bad and doubtful debts, is still governed by AS 4. Provisions and contingent liabilities now follow AS 29, as explained in our guide to contingent liabilities and commitments. The events paragraphs (3.2, 8, 9.3 and 13 to 15 and 17) are fully in force.

Three different end dates apply, and on most files nobody writes them down:

Rule	Period covered	Purpose
AS 4 para 3.2	Balance sheet date to the date the Board approves the statements	Whether to adjust, and what to disclose
SA 560 paras 6 and 7	Date of the statements to the date of the auditor's report, or as near as practicable	Auditor's procedures
Section 134(3)(l)	End of the financial year to the date of the Board's report	Material changes and commitments in the Board's report

The AGM is not a cut-off. Section 134(1) requires Board approval before signing and before the statements go to the auditor, and SA 560 (para A2) says shareholder approval is not needed for the auditor to conclude. The auditor's report cannot be dated before approval (para A3). If the Board's report is signed weeks after the statements, it has to cover events the statements never saw.

The test: adjust or disclose

AS 4 identifies two types of event (para 3.2): those giving further evidence of conditions that existed at the balance sheet date, and those indicating conditions that arose after it. The disclosure rules apply only where the financial position is affected to a material extent (para 9.1).

Adjust (paras 8.2 and 13): the event helps estimate an amount relating to a condition existing at the balance sheet date, or it shows that the going concern assumption is not appropriate.
Do not adjust (para 8.3): the event does not relate to a condition at the balance sheet date.
Disclose in the Board's report (paras 15 and 17): events that are material changes and commitments affecting the financial position. Give the nature of the event and an estimate of its financial effect, or say that no estimate can be made.

A point often missed: AS 4 does not send a non-adjusting event to the notes. Para 8.4 says such events would not normally need disclosure in the financial statements, though they may need it in the report of the approving authority. Section 134(3)(l) requires the same in the Board's report. Other paragraphs do ask for notes on specific items, such as dividends (AS 4 para 14) and bonus issues (AS 20 para 44). Many firms still add a short note on a large event, because a lender may read only the statements. That note does not replace the Board's report.

Small companies and OPCs. Rule 8 of the Companies (Accounts) Rules, 2014 does not apply to them. Rule 8A, the abridged report under section 134(3A), asks in clause (h) for material changes from the close of the financial year "in the nature of business", and their effect on the financial position. That wording is narrower than section 134(3)(l), but AS 4 para 15 has no such limit. Our reading is that a material event should be disclosed even when the nature of business has not changed; neither text addresses the overlap directly.

Decision table: 14 events after the year end

Each row assumes the event is material and happens before the Board approves the statements. The rows marked as judgement apply the para 13 test, and the facts on your file can change the answer.

#	Event	Treatment	Reference and reasoning
1	Customer owing money at 31 March goes into insolvency	Adjust	AS 4 para 8.2 gives this example
2	Customer sound at 31 March fails because of a later event, such as a fire at its plant in June	No adjustment; Board's report	Judgement: the condition arose after the year end (para 8.3)
3	Fire or flood destroys the company's stock or plant after the year end	No adjustment; Board's report; test going concern	Paras 8.3, 8.6 and 15. A major plant can go to the substratum of the business
4	Court case about a pre-year-end event is settled against the company	Adjust the provision	AS 29 para 15 counts evidence from events after the balance sheet date
5	The company's own claim against another party is decided in its favour	No income; Board's report may mention it	AS 29 paras 30, 33 and 34: a contingent asset is recognised in the period in which inflow becomes virtually certain. If the company was the defendant, the decision is evidence on the obligation, so test the provision under para 15 as in row 4
6	Market value of investments falls in the ordinary course	No adjustment	AS 4 para 8.3 gives this example. Year-end values stand for current investments (AS 13 para 31). For long-term ones, ask whether a decline other than temporary already existed (para 32)
7	Year-end stock later sold below cost, or found obsolete	Adjust to net realisable value	AS 2 para 22: later price changes count to the extent they confirm conditions at the balance sheet date
8	Selling prices fall because of a new event, such as a duty cut in July	No adjustment; Board's report if material	Judgement: AS 2 para 22 read the other way
9	Shares issued for cash, or a conversion	No adjustment; EPS unchanged; Board's report	AS 20 paras 46 and 47. A note is encouraged where non-disclosure would affect users
10	Bonus issue, split or consolidation	No balance sheet entry; EPS recalculated for both years	AS 20 para 44, with disclosure of the fact. See EPS under AS 20
11	First loan default after the year end, with no breach at 31 March	No adjustment; Board's report; test going concern	Paras 8.3, 8.6 and 15. For a breach before the year end, see below the table
12	New loan or major capital commitment after the year end	No adjustment; Board's report	Para 15; SA 560 para A9 names new commitments and borrowings as inquiries
13	Wage settlement signed after the year end, with back-dated effect	Judgement: adjust arrears to 31 March if the demand or dispute was open at that date; otherwise next year's cost	Para 13; AS 29 para 15. AS 5 para 16 says arrears from a retrospective wage revision are not prior period items
14	Fraud or error found after the year end	Adjust if it arose by 31 March; a fraud that began after that date is a later event	Judgement: AS 4 does not name fraud or error; this applies para 13. For errors of earlier signed years, see below the table

Loan breached before the year end (row 11). The Guidance Note on Division I (para 7.1.9) keeps a loan non-current after a minor breach if the bank has not demanded repayment before approval, and makes it current if the bank recalls it before approval. Where a material breach makes the loan payable on demand at the reporting date, it stays non-current only if the lender agrees, after the year end and before approval, not to demand payment. See current and non-current classification.

Errors of earlier years (row 14). An error in the year under audit is simply corrected. An error in earlier signed statements is a prior period item under AS 5 (paras 4.3, 15 and 17), shown separately in the current year. AS 5 does not itself bar reopening, but the signed statements normally stay as they are, since revising them means section 131. When it surfaces before approval, practice is normally to take it in the statements still open; see exceptional and prior period items. Where an auditor has reason to believe that fraud by officers or employees has occurred, section 143(12) adds a separate reporting duty, to the Central Government or to the audit committee or Board depending on the amount prescribed in rule 13 of the Companies (Audit and Auditors) Rules, 2014. Frauds reported only to the audit committee or Board go in the Board's report (section 134(3)(ca)).

An adjusting entry means a revised trial balance

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Worked adjusting entry: customer insolvency

A Pvt Ltd, year ended 31 March 2026. A customer owes ₹18,60,000 for sales made in January to March 2026, with an allowance of ₹1,50,000 already held. In June 2026, before the Board meeting, an insolvency order is made against the customer. The company's estimate, kept on file with its basis, is that 20% will be recovered.

Working	₹
Debt at 31 March 2026	18,60,000
Less: estimated recovery at 20%	(3,72,000)
Allowance required	14,88,000
Less: allowance already held	(1,50,000)
Additional allowance	13,38,000

The entries are dated 31 March 2026, because the condition existed at that date:

Entry	Dr (₹)	Cr (₹)
Bad and doubtful debts (other expenses) Dr	13,38,000
To Allowance for bad and doubtful debts		13,38,000
Deferred tax asset Dr (25% assumed)	3,34,500
To Deferred tax (Statement of Profit and Loss)		3,34,500

Effect (₹)	Draft	Adjustment	Final
Profit before tax	62,40,000	(13,38,000)	49,02,000
Current tax at 25%	(15,60,000)	–	(15,60,000)
Deferred tax credit	–	3,34,500	3,34,500
Profit after tax	46,80,000	(10,03,500)	36,76,500

Current tax is unchanged because this example assumes the allowance is not deductible until the debt is written off; check that on the facts. The deferred tax asset needs reasonable certainty of future taxable income under AS 22, and this company's profits are taken to support it. The customer's net balance falls from ₹17,10,000 to ₹3,72,000, the allowance is shown separately in the receivables note as Schedule III requires, and the gross figure stays in the ageing.

EPS, the surplus, the deferred tax note and the ratios all move. Pass the entry in the books, take a revised trial balance and redraft from it, so the statements do not drift from the ledgers.

Proposed dividend: the current position

Older statements show a "provision for proposed dividend". That no longer applies. Under AS 4 para 14 as it now stands, a dividend declared after the balance sheet date is not recognised as a liability at that date unless a statute requires otherwise, because no obligation exists then (para 8.5). It is disclosed in the notes. The standard's word is "declares". A dividend the Board only recommends, subject to the AGM, is further from an obligation still.

Schedule III, General Instruction 6U of Division I, requires the amount of dividends proposed for equity and preference shareholders and the amount per share to be disclosed separately, along with arrears of fixed cumulative preference dividends (Guidance Note para 8.8.7.7).
Board's report: section 134(3)(k) asks for the amount recommended as dividend.
Accounting: the dividend reaches the books after declaration, in the following year. Our reserves and surplus guide shows the surplus reconciliation.

When the event goes to going concern

This is the main case where a condition arising after the year end can change the balance sheet figures. Para 8.6 names deterioration in results and financial position, and unusual changes affecting the existence or substratum of the enterprise, with destruction of a major plant by fire as the example. Para 13 then requires adjustment if the going concern assumption is no longer appropriate. AS 1 (para 27) requires disclosure if a fundamental accounting assumption is not followed.

SA 570 (Revised) sets the auditor's side:

Remain alert throughout the audit for events or conditions that cast significant doubt (paras 10 and 11), and ask management to extend its assessment if it covers less than twelve months from the date of the statements (para 13).
If doubt arises, perform additional procedures: evaluate management's plans and any cash flow forecast, consider new facts, and request written representations on those plans (para 16).
Basis appropriate, material uncertainty exists, adequately disclosed: unmodified opinion with a "Material Uncertainty Related to Going Concern" section (paras 19 and 22).
Material uncertainty, disclosure inadequate: qualified or adverse opinion (para 23).
Going concern basis used but inappropriate: adverse opinion, even if the statements disclose the point (paras 21 and A26). If management instead prepares the statements on another acceptable basis, with adequate disclosure, an unmodified opinion may be possible (para A27).

Where CARO applies, clause 3(xix) looks at material uncertainty as on the date of the audit report about meeting liabilities existing at the balance sheet date, as they fall due within one year from it. The same post-year-end facts feed that answer, so it should agree with the going concern conclusion.

Sample wording

Adapt these to the facts; names, dates and figures are illustrative.

Board's report, material event (section 134(3)(l); AS 4 para 17): "On 14 July 2026 a fire at the Company's godown destroyed inventory with a carrying amount of ₹42,00,000. The inventory was insured and a claim has been lodged. The financial effect, net of any insurance recovery, cannot be estimated at the date of this report. The event occurred after the balance sheet date and no adjustment has been made in the financial statements for the year ended 31 March 2026."

Board's report, nothing to report: "No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year and the date of this report." Write this only after asking.

Note, proposed dividend (General Instruction 6U): "The Board has recommended a final dividend of ₹1.50 per equity share for FY 2025-26, amounting to ₹6,00,000 on 4,00,000 shares, subject to approval at the annual general meeting. It has not been recognised as a liability at 31 March 2026."

Note, material uncertainty (SA 570 para 19): "After the year end the Company defaulted on instalments of its term loan, and its bank has recalled the loan. The Company's net worth is negative at 31 March 2026. Management's plans are to restructure the loan and bring in promoter funds; these are not yet agreed. These conditions indicate a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. The statements have been prepared on a going concern basis for the reasons given above."

The auditor's procedures and a checklist for the days before signing

SA 560 para 7 requires four things, run to the report date or as near as practicable: understand management's procedures for identifying subsequent events, inquire of management and those charged with governance, read minutes of meetings held after the year end (and ask about meetings without minutes yet), and read the latest interim statements, if any. In a small company there may be no interim accounts or minutes, and para A7 then points to books and records, including bank statements. Para 9 requires a written representation that all events requiring adjustment or disclosure have been adjusted or disclosed. The illustrative letter in SA 580 carries that line, and the letter is dated as near as practicable to, but not after, the report date (SA 580 para 13). See engagement and representation letters.

After the report is dated there is no duty to keep looking (para 10), but a fact that becomes known before issue must be discussed, and amended statements normally get a new report (para 11). After issue, paras 14 to 17 apply, and revising the statements or Board's report means section 131 and Tribunal approval.

The checklist below adds to check 6 in before signing the balance sheet: 7 checks.

Check	Source
Board meeting date, report date and Board's report date written on the file	AS 4 para 3.2; SA 560 para 5
Inquiry of management made close to signing, using the SA 560 list: new loans, guarantees, share issues, asset sales, assets destroyed, developments in contingencies, unusual entries	SA 560 paras 7(b) and A9
Minutes read since 1 April; agenda obtained for any meeting without minutes	SA 560 para 7(c)
Bank statements after the year end read for large unusual items, returned cheques and default charges	SA 560 para A7
Receipts after the year end from major debtors, and sales after the year end of slow stock, compared with year-end values	SA 560 para A6; AS 2 para 22
Status of each case and demand updated, and counsel asked where needed	SA 560 para A8; AS 29 para 15
Each event classified with a one-line reason; adjusting entries passed in the books	AS 4 paras 8.2, 8.3 and 13
Bank letters on any breach checked for date, and loan classification reconfirmed	Guidance Note para 7.1.9
Dividend note and EPS reviewed for dividends and bonus issues after the year end	General Instruction 6U; AS 20 para 44
Going concern conclusion revisited and agreed with CARO 3(xix)	SA 570; CARO 2020
Draft Board's report read: material changes paragraph agrees with what you were told	Section 134(3)(l), or Rule 8A(1)(h); AS 4 para 15
Representation letter includes subsequent events and is dated correctly	SA 560 para 9; SA 580 para 13

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Schedule III guideNotes and additional disclosures

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Frequently asked questions

What is the difference between adjusting and non-adjusting events under AS 4?

An adjusting event gives further evidence of a condition that existed at the balance sheet date, or shows that going concern is no longer appropriate, and the figures are changed (AS 4 paras 8.2 and 13). A non-adjusting event reflects a condition that arose after that date, so the figures stay as they are (para 8.3), and if material it is disclosed in the Board's report (paras 15 and 17).

What is the cut-off date for events after the balance sheet date under AS 4?

For a company, it is the date the Board of Directors approves the financial statements (AS 4 para 3.2), not the AGM date. The auditor's subsequent events procedures run to the date of the auditor's report (SA 560), and section 134(3)(l) runs to the date of the Board's report.

Is proposed dividend a liability at the balance sheet date under AS 4?

No. Under AS 4 para 14, a dividend declared after the balance sheet date is not recognised as a liability at that date unless a statute requires otherwise, and it is disclosed in the notes. Schedule III General Instruction 6U of Division I separately requires the amount proposed and the amount per share to be disclosed.

Is a fire after the year end an adjusting event?

Normally not. The damage arose after the balance sheet date, so the figures are not changed and a material loss goes in the Board's report with its nature and estimated financial effect. If the fire destroys a major plant and the going concern assumption is no longer appropriate, AS 4 paras 8.6 and 13 require the statements to be adjusted.

Are non-adjusting events disclosed in the notes or in the Board's report?

AS 4 names the report of the approving authority, which for a company is the Board's report (paras 8.4, 15 and 17), and section 134(3)(l) requires the same. Many firms also add a short note where the event is large, but the note does not replace the Board's report. Specific items such as dividends and bonus issues do go in the notes under AS 4 para 14 and AS 20 para 44.

Which written representation does the auditor need on subsequent events?

SA 560 para 9 requires a written representation, under SA 580, that all events after the date of the statements for which the framework requires adjustment or disclosure have been adjusted or disclosed. The letter is dated as near as practicable to, but not after, the date of the auditor's report (SA 580 para 13).

Sources

A trial balance cannot see an event in June

Finding the event stays with you and the client. Once the entry is passed, SignReady compares the revised trial balance and produces an editable Excel draft of the Schedule III statements for the firm to review, and FinalCheck looks for arithmetic and cross-reference differences. First 3 finalisations free.

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About this guide. Written by the SignReady Team at PracticeGuru (Brainy Accountant Solutions Pvt Ltd). SignReady is our product and is mentioned where it fits. The guide reflects the law and standards as at 31 October 2026 and the sources listed above. It is general information, not professional advice: check the primary sources and apply your own professional judgement to each engagement.
Version history: 12 Nov 2026 — first published.