IAS 10 and COVID-19

 IAS 10

The COVID-19 pandemic is neither an adjusting nor adjusting event. The COVID-19 pandemic has resulted in a global health crisis. It has created devastating social, economic and political effects. Every day, people are losing jobs and income. IAS 10 Events after the Reporting Period does not consider the cause of an event; IAS 10 only considers the effect of an event. For example: event - covid pandemic; cause - SARS-CoV-2, has caused a pandemic of respiratory illness, called COVID-19; effect - the bankruptcy of a customer that occurs after the reporting period and the date when the financial statements are authorised for issue. In this case IAS 10 requires an entity to adjust the amounts recognised in its financial statements – i.e. the debtors balance. Why is the debtors balance adjusted – only because the debtor became bankrupt? No adjustment is made because of the cause of bankruptcy. COVID-19 was the main cause of bankruptcy but the reason why an IAS 10 adjustment is made. The IAS 10 adjustment is a as a result of the effect of the cause – the debtor became bankrupt. An impairment is created because of the belief that persons will not pay their debts not because of COVID-19. There are persons that pay their debts despite COVID-19.