When can you make a Prior Year Adjustment? 1


Accounting Standards

Until FRS102 basically an error had to be Fundamental for a Prior Year adjustment to be justified

‘Fundamental’ is defined in paragraph 63 of FRS 3 as an error of such significance as to destroy the truth and fairness and hence validity of a set of financial statements
Or you could make a change as a result of a change in Accounting Policy.
This position is about to change with arrival of FRS 102. Paragraph 10.21 states that ‘an entity shall correct a material prior period error retrospectively in the first financial statements authorised for issue after its discovery’. This means that, on adoption of FRS 102, the threshold for correcting an error by use of a prior period adjustment has reduced from fundamental to material (ICAEW)
The ACCA have a useful factsheet on prior year adjustments – Factsheet 188
steve@bicknells.net

One comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s