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  Errors

Introduction to Errors

The omissions or misstatements in the financial statements are termed as Errors. They might take place for a variety of reasons that involve mathematical mistakes, oversights, misinterpretation of facts and fraud. Occasionally these errors are important in nature and/or size and are not discovered until a later period. In such type of a situation, the common rule is that the appropriate figures for the earlier period(s) where the errors take place should be restated for comparison purposes. If the errors take placed before the prior periods available for comparison, then the opening balances of assets, liabilities and equity for the earliest prior period that is available should be restated. The nature of the errors and their influence on relevant items and on earnings per share for the current and the prior period(s) should also be disclosed.

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