Can anyone tell me the disclosure required if making a prior year adjustment to a company that just files the abbreviated balance sheet? I understand I need to restate the comparatives, however is a note required as well? Does someone have an example of a note? Thanks.
Anon
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Yes..
Although you restate the comparatives, the PYA is shown in the current year as an adjustment on reserves. A note of this adjustment needs to be shown. The content of the note is usually narrative and has no specific content but must inform users why the adjustment was necessary. There are no real examples as each one is based on the circumstances that created the PYA ... obviously it's not good practice to attach any blame!. The important thing is to make sure the adjustments are required under FRS 3 as not all adjustments should be made. There are also tax implications in restating the prior year which need to be dealt with.
Where does it go?
I´m also interested to know whether you need to show the prior year adjustment on the face of the balance sheet - or does it just all get wrapped up in entry for "profit and loss account" with a note to disclose?