Prior-period error
An error differs from a change in estimate that results from new information or subsequent developments. IAS 8 generally requires material prior-period errors to be corrected retrospectively by restating the affected comparative amounts, unless determining the effect is impracticable. If the error predates the earliest comparative period presented, adjust the opening balances of assets, liabilities and equity for that period as appropriate. Explain the correction in the required disclosures.
Worked example
A material invoice for last year’s delivered goods was available before last year’s statements were authorised but omitted. The entity corrects the comparative figures and relevant opening balances as required, rather than treating it as this year’s ordinary purchase.
Common mistake
Calling every difference between an estimate and its eventual outcome an error, or correcting a material prior-period error only in current-year profit without considering retrospective restatement.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |