Prior Period

Adjustments
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Definition

A prior period adjustment is the

correction of an accounting error
that occurred in the past and was
reported on a prior year’s
financial statement.

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Prior Period
Errors

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Full PFRS
PFRS for Small
and Medium
Enterprise
(SME)
April Hansson

PFRS for
+1 23 987 6554
april@www.proseware.com

Small Entity www.proseware.com

(SE)
 Definition
Full PFRS PFRS for SME PFRS for SE
• Prior period errors are omissions • Same with Full PFRS • Same with Full PFRS
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.

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 Treatment of Prior Period Errors
Full PFRS
• An entity shall correct material
prior period errors retrospectively
in the first set of financial
statements authorized for issue after
its discovery.
• A prior period error shall be
corrected by retrospective
restatement.
• Restating the opening balances of
assets, liabilities and equity for the
earliest prior period presented if the
error occurred before the earliest
prior period
PFRS for SME PFRS for SE
• Same with Full PFRS • An entity shall correct all material
prior period errors by excluding its
impact from net income for the
period when the error is discovered.
• The carrying amounts of assets and
liabilities at the beginning of the
current period shall be restated to
correct the material prior period
error.
• Any cumulative effect shall be
recognized as an adjustment to the
opening balance of retained
earnings (or other component of
equity, as appropriate) of the
current period.
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 Correction of Prior Period Error
Full PFRS PFRS for SME PFRS for SE
• Restate the earliest period presented • Same with Full PFRS • Adjust the opening balance of
and each comparative period as if current year retained earnings
the policy had always applied, to
the extent practicable.

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Restatement of Comparative Information
Full PFRS PFRS for SME PFRS for SE

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Full PFRS
• The nature of the prior period error
for each prior period presented, to
the extent practicable, the amount
of the correction;
• Or each financial statement line
item affected, and for basic and
diluted earnings per share;
• The amount of the correction at the
beginning of the earliest prior
period presented if retrospective
restatement is impracticable, an
explanation and description of how
the error has been corrected.
Disclosures
PFRS for SME PFRS for SE
• Same with Full PFRS • The nature of the prior period error.
• The amount of adjustments to the
carrying amounts of assets and
liabilities at the beginning of the
current period and any cumulative
effect recognized as an adjustments
to the opening balance of retained
earnings of the current period.
• For each financial statement line
item affected in the prior period, the
amount of error and the adjusted
amount had the correction been
applied in the prior period.
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 Disclosures-Financial Statements of Subsequent Periods
Full PFRS PFRS for SME PFRS for SE
• Financial statements of subsequent • Same with Full PFRS • Same with Full PFRs
periods need not repeat these
disclosures

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