Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

My account — Professional

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

CoreIntermediate · Advanced · Expert

Retrospective restatement of an error

Learning objectives

  • Calculate the correction to be made in the comparatives and in the opening balances of the earliest period presented, including the tax effect.L2, L3, L4
  • Record the correction of a prior period error in opening equity, without passing it through profit or loss of the period in which it is discovered.L2, L3
  • Analyse the impact of a restatement on the financial statements (comparative profit or loss, equity, opening statement of financial position).L3, L4

Normative references

  • IAS 8 §4The tax effects of corrections of prior period errors and of retrospective adjustments made to apply changes in accounting policies are accounted for and disclosed in accordance with IAS 12.
  • IAS 8 §5Definitions: accounting policies — the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements; accounting estimates — monetary amounts in financial statements that are subject to measurement uncertainty; 'material' — used as defined in IAS 1 (para. 7); prior period errors — omissions from, and misstatements in, the financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available when those financial statements were authorised for issue and could reasonably be expected to have been obtained and taken into account (mathematical mistakes, mistakes in applying accounting policies, oversights, misinterpretations of facts, fraud); retrospective application — applying a new accounting policy as if that policy had always been applied; retrospective restatement — correcting the recognition, measurement and disclosure of amounts as if the error had never occurred; prospective application — applying a new policy to transactions occurring after the date of the change, and recognising the effect of a change in estimate in the current and future periods affected; impracticable — a requirement the entity cannot apply after making every reasonable effort to do so, which, for a prior period, covers three situations: effects not determinable; assumptions required about what management's intent would have been at the time; significant estimates for which it is impossible to distinguish objectively information that provides evidence of circumstances that existed at that date and that would have been available when the financial statements were authorised for issue.
  • IAS 8 §42Subject to para. 43, the entity corrects material prior period errors retrospectively in the first set of financial statements authorised for issue after their discovery, by restating the comparative amounts for the prior period or periods presented in which the error occurred or, if the error occurred before the earliest prior period presented, by restating the opening balances of assets, liabilities and equity for that earliest period.
  • IAS 8 §43A prior period error is corrected by retrospective restatement except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the error.
  • IAS 8 §44When it is impracticable to determine the period-specific effects for one or more prior periods presented, the entity restates the opening balances of assets, liabilities and equity for the earliest period for which retrospective restatement is practicable (which may be the current period).
  • IAS 8 §45When it is impracticable to determine, at the beginning of the current period, the cumulative effect of an error on all prior periods, the entity restates the comparative information to correct the error prospectively from the earliest date practicable.
  • IAS 8 §46The correction of a prior period error is excluded from profit or loss for the period in which the error is discovered; any information presented about prior periods, including historical summaries, is restated as far back as is practicable.
  • IAS 8When it is impracticable to determine the amount of an error (for example, a mistake in applying an accounting policy) for all prior periods, the entity, in accordance with para. 45, restates the comparative information prospectively from the earliest date practicable; it therefore disregards the portion of the cumulative restatement of assets, liabilities and equity arising before that date.
  • IAS 8 §53Hindsight is not used when applying a new accounting policy to, or correcting amounts for, a prior period, either in making assumptions about what management's intentions would have been at the time or in estimating the amounts recognised, measured or disclosed.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

38 questions

Practical cases

Workpapers