Omitted debtors in PY accoounts are being corrected by way of a prior year adjustment. The accounts are prepared under FRS 105. Should a note be included in the accounts explaining the nature and effect of the correction?
Many thanks
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Regardless of what FRS105 requires, don’t you want the accounts to explain the PYA anyway?
6B.7 Where the corresponding amount for the immediately preceding reporting period is not comparable with the amount to be shown for the item in question in respect of the reporting period to which the statement of financial position or income statement relates, the former amount may be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the financial statements. (Schedule 3B, paragraph 5)
This is likely to be relevant when there has either been a change in accounting policy or the correction of a material prior period error.