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Restatement of Accounts

  • 05-08-2010 8:10am
    #1
    daheff
    Registered Users, Registered Users 2 Posts: 5,933 ✭✭✭


    Hi

    I was at the AGM for the management company of my estate yesterday. They mentioned that the accounts for a couple of years were incorrect (a number of accruals and payments were missing). To fix up the accounts in last years accounts they have just added in the missing payments and accruals. They have not adjusted the previous years comparatives nor made any reference to these errors in the notes to the accounts. Also the amounts in question are material...turnover is circa 150-200k and these amounts are between 30 & 60 K

    My questions are:
    should the accounts for the previous year be completely restated or is it enough just to amend the comparatives? what kind of details should be in the notes to the accounts?

    Also should the accountant/auditor have signed off on these accounts knowing there were issues with previous years that were just added into this years figures?

    thanks


Comments

  • #2
    Pandoras Twist
    Registered Users, Registered Users 2 Posts: 1,375 ✭✭✭Pandoras Twist


    I only have basic college level accountancy knowledge but as far as I know the previous years should have been restated, with comparatives. And i dont think an accountant/auditor should have signed off on them/


  • #3
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    The auditor does not re- audit the comparatives, but does have to check that the opening balances coming forward are correct and that they are comparable with the current years figures (which are being audited).

    If in the opinion of the auditor the current years figures are not comparable with the comparatives they should be restated. There should be a note explaining the reason and nature of the restatement and the comparatives should have the heading "as restated". There are other items that may be required in the reserves but essentially that is it.

    If the accounts are misleading as a result of the comparatives not being misstated then he should qualify his report or have the figures restated.

    If he feels that despite the errors in the previous year in the opinion of the auditor the comparatives are still comparable with the current year, the differences being immaterial, he may give a clean audit report.

    An auditor would look at the accounts as a whole and the cumulative effect of all the errors on the accounts and not just each individual error.

    Kind Regards

    dbran


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