Correction of errors in accounting and reporting. Accounting information on error correction

There are various methods by which specialists can control primary accounting documents. However, from time to time, in the reflection of various data, there are various kinds of inaccuracies. Let's consider further how corrections of errors in accounting and reporting are carried out.

General information

Accounting mistakes are the incorrect reflection or non-reflection of any other facts of economic activity of the enterprise. Completely prevent the probability of their occurrence is impossible. However, it is possible to take timely measures to detect errors in accounting (financial) reporting and to eliminate their consequences. It must be remembered that all discovered inaccuracies are subject to adjustment.

Normative base

Primary accounting documents are prepared in accordance with the Regulations and Regulations (PBU). Since 2010, the PBU 22/2010 is in force. He established the procedure for correcting accounting errors and the conditions for disclosing information about inaccuracies in documents of legal entities other than credit companies, municipal and state institutions.

Causes of incorrect information

According to PBU 22/2010 typical errors can be caused by:

• Inaccuracies in calculations;
• Unscrupulous actions of officials conducting accounting at the enterprise;
• Incorrect classification or analysis of the facts of economic activity of the organization;
• Incorrect implementation of the company's accounting policies;
• Incorrect use of information available at the time of signing the securities;
• Incorrect application of the norms of legislation that regulate accounting.

Classification

There are the following types of accounting errors:

1. Countable defects. These are shortcomings that are associated with incorrect calculations or incorrect insertion / transfer of information in registers.
2. Defects caused by untimely recording of primary documentation. Such deficiencies appear, as a rule, because of the lack of commitment in the work of the units. Signed documents are often just in time do not fall into the accounts department. Paper can be detained and counterparties. In this case, their non-reflection will not be considered erroneous.
3. Deficiencies that arise due to improper application of legislation. Such errors are a consequence of violations of the rules of securities and the disclosure of information in them.

In addition to the above, defects can result from inaccurate, unreliable, incomplete data. These errors can be either unintentionally or intentionally committed. In the latter case, therefore, some enterprises try to hide the facts of misconduct. It can be, for example:

• Overstatement of the amount of material to be written off in accordance with those or other grounds (theft of raw materials);
• Non-submission of cash-receipt orders by the responsible employee with the subsequent non-reflection of the receipt of cash in the cash department of the organization (the fact of financial fraud).

Exceptions

Are not mistakes made by omissions or inaccuracies in the reflection of facts of economic activity in the financial statements or accounting, revealed due to the receipt of new data that were not available to the enterprise at the time of making (non-entering) information on the relevant transactions. It will not be recognized as a defect and a change in the estimates. In particular, we are talking about reserves:

- for depreciation of monetary investments;

- for doubtful debts;

- for the depreciation of MPZ.

All of the estimated values are not included in the balance lines. They correct only certain of its indicators.

Methods for identifying gaps

For the timely detection of errors in accounting and accounting is recommended:

1. Conduct a regular inventory of the existing property and accepted obligations of the company, including reconciliation of settlements with counterparties.
2. Analyze all data contained in the accounting registers. In particular, within the framework of these measures, the comparability of the parameters by periods is checked (the conformity of the revenue and expenditure levels is estimated).
3. Check for non-standard postings and major transactions.
4. Comparison of reporting indicators - perform arithmetic and logical control.

Ways of Correcting Accounting Errors

Carrying out of adjustments can be carried out by the following methods:

• Partial. Correction of errors in accounting and reporting in this case is carried out by additional posting, supplementing or reversing the operations performed earlier only by the amount of positive or negative difference.
• Complete. In this case, the method of reversing all the previous operations is used, with the subsequent confirmation of the correct data.

When using any of the above options, comments should be compiled with references to those papers for which corrections are made. For the identified shortcomings, an accounting document is prepared to correct the error.

Criteria influencing adjustments

Correction of errors in accounting and reporting is carried out in one way or another, depending on the degree of significance of the deficit. According to this indicator, two categories of defects are identified. Errors can be significant or insignificant. The criteria by which the defects are classified in the first category should be indicated in the relevant papers. A significant error in accounting is a defect that alone or in combination with other defects can affect the economic decision of interested users over a period of time, which is accepted by them on the basis of financial data presented for this period of time. Directly the criteria indicating the degree of significance are determined by the enterprise independently. The organization in this case proceeds from both the magnitude and nature of the relevant articles (articles). The situation in the financial policy of an enterprise can be formulated thus:

"An error should be recognized as significant if it provokes a distortion of the reporting indicator by more than 10% of the accepted currency or the value of the indicator."

Defects detection period

This criterion also influences the rules, according to which errors in accounting and reporting are corrected. In particular, the shortcomings can be:

1. Current year, identified:

• Before its completion;
• After its termination, but before the signing of the accounts is carried out.

2. Preceding the year, found:

• After the signing of the securities, but before they are provided to the interested parties;
• After provision to users, until the approval of the accounts;
• After the approval of the securities.

Interested people

These include:

1. Participants of LLC.
2. Bodies of state power, local self-government and other instances authorized to exercise the rights of the owner.
3. Shareholders of JSC.

Special cases

Regardless of the degree of significance:

• Correction of errors in accounting and reporting, revealed before the end of the current year, is carried out by marks corresponding to the accounts in the month in which they were found.
• Correction of deficiencies established at the end of the year before the signing of securities is carried out by entries for December of the year in which they are drawn up.

These provisions mean that, whatever the material errors that were made in the quarterly interim statements, they are not revised. If in the II quarter. The enterprise will find a significant defect that appeared in Q1, the changes that will be caused by its correction will be reflected in the securities for 6 months (9 months, year) and will not affect the indicators for the I quarter.

Features of elimination of minor defects

If, after signing the accounts, the accountant finds an error that is not considered significant, according to the current accounting policy of the enterprise, and was allowed in the previous period, then according to clause 14 of the PBU, it is corrected by marks on the relevant accounts in the month when it was discovered. Losses and profits arising from the elimination of a deficit are included in other expenses or revenues for the current period. For example:

"In January 2011, the enterprise purchased and immediately used office supplies, without reflecting these transactions in accounting.This shortcoming was revealed in November 2012. In this case, the responsible employee compiles an accounting report on the error.The adjustment is reflected in the securities for November as follows:

Debit sc. 10.9. "Household Supplies and Equipment".

Account credit by fixing settlements (76, 73, 71, 70, 62, 60).

Reflected acceptance of office supplies in accordance with the invoice for number 101 of January 20, 2011.

The debit of the account on fixing expenses (44, 26).

Credit ac. 10.9. " Household Supplies and Equipment".

The use of goods for office needs in January 2011 is shown.

Debit sc. 91.2. "Other costs".

The credit of the account on the account of expenses (44, 26).

Losses for 2011 are reflected, which are related to late indication of economic transactions for the acquisition and subsequent use of office supplies (January 2011, Consignment Note No. 101 dated January 20, 2011). "

An Important Moment

Entities in the small business sector, in addition to issuers of publicly traded securities, have the right to correct errors in accounting and reporting that are recognized in accordance with the company's financial policy as significant, admitted in the previous annual cycle and identified after approval of securities for the current year, as indicated Above the scheme without a retrospective recount. This provision is fixed in the PBU 22 (sub-item 2, item 9). In the financial policy of the organization should fix a paragraph on whether the company will use this opportunity.

Features of the correction of significant flaws

The procedure for correcting such errors will depend on the period in which they were discovered. Thus, a significant deficit of the last year, revealed after the signing of securities for the current period, but before submission to their interested parties, is corrected in accordance with paragraph 6 of PBU 22. In particular, the accounting report on the correction of the error indicates the removal of its notes on the relevant accounts for December Of this period. If the securities were provided to some other users (deposited in the Tax Inspectorate, statistical bodies and others), then they should be replaced with those in which a significant defect is corrected. Such reporting is called revised. A defect recognized as significant, admitted last year and identified before the provision of securities for the current year to interested parties, is also adjusted in accordance with clause 6 of the PBU. The responsible employee will need to check the balance. The revised forms shall disclose the following information:

• That these papers replace the previous ones completely;
• About the grounds for which there was a need to check the balance and make a new one.

The revised papers are sent to all addresses for which the previous ones were sent. A significant error of the previous period, found after the approval of the annual accounts, is corrected by marks on the relevant accounts in the current period. In this case, the scoring partner acts as a correspondent account. 84 "Uncovered loss (retained earnings)".

Conversion of comparative indicators

It is implemented by correcting the reporting elements as if the error of the previous period had never been allowed. This method is called retrospective recalculation. It is performed against comparative figures from the previous period when a defect was admitted. In other words, if the inaccuracy took place in 2011, and was identified in November 2012, then in the accounts for 2012 the recalculation of the indicators is carried out as of December 31, 2011. In this case, the elements as of 31.12.2012 will contain the corrected information. As exceptions, there are cases when it is not possible:

• To establish the connection of this inaccuracy with a specific period;
• Assess the impact of a cumulative total under all previous reporting periods.

Special requirements

It is necessary to pay attention to the fact that when correcting a significant inaccuracy of the previous period, discovered after the balance lines were approved, they can not be replaced, revised and re-submitted to interested users. If the defect was admitted before the earliest period from the papers submitted for the current year began, the opening balance of the relevant items of liabilities, capital, assets is subject to adjustment. At present, the accounting records are used to reflect the indicators for the end of the two preceding years. Thus, if inaccuracy is admitted in 2009, and detected in 2012, then the opening balance for the beginning of 2010, 2011 and 2012 is recalculated. The received information will be reflected in the explanatory note attached to the accounts for the last specified year. If the determination of the effect of a material error is not possible for one or more previous periods that are reported, the enterprise needs to adjust the opening balances for certain items. These include capital, liabilities and assets at the beginning of the earliest period, for which it is possible to make a recount. The impossibility of establishing the influence of a significant error on the previous reporting gap exists if numerous or complex calculations are needed, in the performance of which it is impossible to single out information on the circumstances that existed at the time of the occurrence of the defect, or whether information obtained after the statement is required to be applied.

Disclosure of information

According to the requirements of clause 15 of the PBU, an explanatory note to the financial statements on the annual activity of the enterprise should contain certain information concerning significant errors of previous periods eliminated in the current cycle. In particular, the following is indicated in the securities:

1. The amount of adjustment for each article is for each previous period as much as practicable.
2. The nature of the error.
3. Amount of adjustment for basic and diluted earnings (loss) per share. The indicator is indicated in the event that the enterprise is obliged to disclose information about the profit, which falls on one share.
4. The amount of the change in the opening balance for the earliest of the reported reporting periods.

If it is not possible to determine the impact of a significant inaccuracy on one or more previous cycles, which are reflected in the papers, the explanatory note should disclose the reasons that led to this circumstance. Along with this, you should also specify the method of making a correction for a significant error, as well as the period from which the changes are recorded.

Example

In September 2012, it was revealed that in 2010, the revaluation of principal amounts of long-term loans and loans purchased by the enterprise in foreign currency was not revalued. In the process of calculating the exchange rate difference from the amount of these liabilities at the rate for 2012, the accountant received a negative difference. This defect is considered significant, the organization does not act as a small enterprise. The specified error resulted in:

1. Distortion of the sum of indicators on the size of the negative exchange rate difference for the following items:

- the amount of borrowed funds is understated (line 1410);

- The amount of undistributed profit is too high (line 1370).

2. Distortion of the amount of indicators by the amount of excessively calculated income tax from the size of exchange differences:

- Undistributed profit is understated (line 1370);

- Short-term debt is overstated by the amount of profit tax (line 1520).

It is necessary to perform retrospective recalculation as of 31.12.2010 and 31.12.2011. The following transactions are recorded in the enterprise for 2012:

The recognition of the negative difference arising from the revaluation of long-term loans and loans for 2012:

Debit sc. 84 "Uncovered loss (retained earnings)".

Credit ac. 67 "Calculation of long-term loans and loans."

The excessively calculated income tax with a negative difference for 2010:

Debit sc. 68.4 "Income tax" (in the absence of a credit balance on this account, the company will have a tax (deferred) asset - debit of 09).

Credit ac. 84 "Uncovered loss (retained earnings)".

Finally

As you can see, fixing errors is a laborious process. It requires the employee to pay special attention to and knowledge of the regulations governing these procedures. As it was mentioned above, it is impossible to exclude the possibility of errors in the enterprise completely. Therefore, specialists must have sufficient knowledge for timely detection and correct elimination of defects in accounting records.