Any Answers Answered: error correction

Over recent weeks, there have been a few threads in Any Answers asking for advice on correcting errors, explains Steve Collings.

The typical scenarios entail firms taking on new clients and discovering errors that have been made in the client’s accounts. Advice normally entails liaising with the previous firm to ascertain the reasons why certain accounting treatments have taken place through to re-creating the prior year’s financial statements and prior-period adjustments.

This article will take a look at the various ways in which errors might occur within a set of financial statements, together with advice on the best ways in which to correct such errors.

Error

The term ‘error’ is taken to mean an unintentional mistake. FRS 3 Reporting Financial Performance also has the concept of ‘fundamental error’. Fundamental errors are defined at paragraph 63 to FRS 3 and are ‘those that are of such significance as to destroy the true and fair view and hence the validity of financial statements.’

Continued...

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Comments

What about very small companies or charities?

taylorag | | Permalink

I have a client whose balances were understated by £140* because the previous accountant didn't include cash in hand.  The client wanted me to do the accounts "perfectly" as they had encountered problems with the previous accountant and didn't want to risk upsetting the charities people.  I therefore restated and noted in the Independent Examiner's report that I was restating the opening cash balance.  

The question is: did I go over the top, or did I simply reassure a client?  I think I did the latter, but would be interested in what others think of what I did

 

* against income of between £30 - £40k per annum

 

Steve Collings's picture

Layouts

Steve Collings | | Permalink

The layouts seem to have gone a bit out of sync from the original file.  The £260k and £1.345m figures in the STRGL should be underneath the 2011 current year, whereas the only figure that should be in the 2010 comparative year should, of course, just be the £1.540m figure.

Cheers

steve

 

 

JCresswellTax's picture

It always amazes me.......

JCresswellTax | | Permalink

The number of accountants that act for "New Client Limited".

robertlovell's picture

Re. Layouts    1 thanks

robertlovell | | Permalink

Hi Steve,

I had a few issues with the formatting when uploading your article, but think it's all fixed now.

Do let me know if it's as it should be now.

Thanks, Rob

 

Corporation tax return

Sarfraz Fayyaz | | Permalink

Do we have to resubmit the corporation tax return for 2010 once error has been corrected?

Thanks