Correcting prior period error
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- Posts: 30
- Joined: 10 Feb 2021, 07:37
Correcting prior period error
Dear Brother, what would be the journal entry of the unrecorded bank balance and land?
The previous author skipped that
According to me:
Cash at bank-Dr
Land-Dr
Retained earnings- Cr.
In addition, if the amount is material, should I give a retrospective adjustment as per IAS-8? Or I can only adjust it with the retained earnings?
The previous author skipped that
According to me:
Cash at bank-Dr
Land-Dr
Retained earnings- Cr.
In addition, if the amount is material, should I give a retrospective adjustment as per IAS-8? Or I can only adjust it with the retained earnings?
Re: Correcting prior period error
Should we wait for your brother's response, or is it alright for other community members to share their views?
PS. you'll notice that I changed this topic's title, please don't use generic titles like "IAS 8"
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- Posts: 30
- Joined: 10 Feb 2021, 07:37
Re: Correcting prior period error
Sorry. Please let me know the solution. Thank you
Re: Correcting prior period error
It's hard to comment on these entries without knowing the underlying scenario. Retrospective restatement is necessary for material errors. I recommend checking out this knowledge base article: https://ifrscommunity.com/knowledge-base/errors/
Re: Correcting prior period error
Seems odd that bank accounts and land would be 'skipped', sounds like a comprehensive review is needed...maybe you have unrecorded liabilities or revenue too...
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- Posts: 30
- Joined: 10 Feb 2021, 07:37
Re: Correcting prior period error
What would be the solution if as an auditor we do not have relevant information and the client is not willing to give that?
Re: Correcting prior period error
This should be deemed as limitation on scope. Refer to ISA 705 or your local equivalent auditing standard.
Re: Correcting prior period error
I would think a limitation would be generous, I would think some qualifications were in order, all depends.
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- Posts: 30
- Joined: 10 Feb 2021, 07:37
Re: Correcting prior period error
Now, is it okay to add the land value and bank balance with retained earnings as the prior year errors adjustment and qualify the opinion?
Re: Correcting prior period error
It's impossible to comment without knowing a lot more information. If you're the auditor here you should probably speak to a partner.