Yakub02
Banned
Errors Errors might happen in preparing financial statements. If they are discovered quickly, they are corrected before the finalised financial statements are published. When this happens, the correction of the error is of no significance for the purpose of Financial Reporting.
A problem arises, however, when an error is discovered that relates to a prior accounting period. For example, in preparing the financial statements for Year 3, an error may be discovered affecting the financial statements for Year 2, or even.
Prior period errors are omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:
(a) was available when financial statements for those periods were authorized for issue; and (b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.
Correction of prior period errors All material prior period errors should be corrected retrospectively in the first set of financial statements following the discovery of the error. Comparative amounts for the previous period should be re-stated at their corrected amount.
If the error occurred before the previous year, the opening balances of assets, liabilities and equity for the previous period should be re-stated at their corrected amount unless that is impracticable. The correction of a prior period error is excluded from profit or loss in the period when the error was discovered.
A problem arises, however, when an error is discovered that relates to a prior accounting period. For example, in preparing the financial statements for Year 3, an error may be discovered affecting the financial statements for Year 2, or even.
Prior period errors are omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:
(a) was available when financial statements for those periods were authorized for issue; and (b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.
Correction of prior period errors All material prior period errors should be corrected retrospectively in the first set of financial statements following the discovery of the error. Comparative amounts for the previous period should be re-stated at their corrected amount.
If the error occurred before the previous year, the opening balances of assets, liabilities and equity for the previous period should be re-stated at their corrected amount unless that is impracticable. The correction of a prior period error is excluded from profit or loss in the period when the error was discovered.
