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As an Accountant, what will you do if you find the previous years audited accounts have some mistakes, which affecting the current year?

<p>I am facing such a problem now, the old accountant of my company made alot of mistakes and auditor didn't rectify it</p>

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تم إضافة السؤال من قبل Kripesh Krishnan Kutty Nair , Merchandiser , Al Seer Group
تاريخ النشر: 2014/11/19
Syed Hyder
من قبل Syed Hyder , Assistant Manager–Commercial Finance (Inventory & Payables) , Daraz.pk (Ali Baba Venture)

Depends on what type of mistakes committed by old Accountant. As far I am concerned, I had to rectify all such errors in the past so that the financials records were True & fair and represents the actual position of the company.Most important draft a report regarding all the mistakes committed by the old accountant and also mention the steps taken by you to rectify such error. Such type of errors are mostly found in AR n AP ledger where accountant is too lazy is updating the record of these ledger.Fire the report the higher management of department (if that person is cooperative) otherwise someone more superior will be handy.Afterall you have to show your efficiency 

Mahmoud Daoud
من قبل Mahmoud Daoud , Head of Risk Management , TAQA Group

Depends on the nature & materiality of the mistake, If material and affects the fairness of the financial statements, then a prior year adjustment is required by the accounting standards. 

 

Wish you the best in your career.

Mohammed  Mohammed
من قبل Mohammed Mohammed , Senior SAP Consultant , Abyat Mega Store

That will be recorded as prior period expenses or income ,as the case may be ,depending on materiality concept

Incredible, It is the result of lack of professional skills of Accountant and Auditor. Professionalism is the Key. 

Altaf Bhoon ACA
من قبل Altaf Bhoon ACA , Assistant Finance Manager , Atlantic Maritime Group FZE

The mistake and error dealt in the different way depending on its nature and materiality. Normally we deal these errors in the following way

1. Do nothing

2. Revised previous accounts

3. Only do the reclassification and revise the the comparatives figures.

There may be some other solutions but again depend on the nature and type of errors.

Hafeez Ahmed
من قبل Hafeez Ahmed , Camp Boss , Al Sahraa Group

Make reversal or rectification JV

Hassan Sallam
من قبل Hassan Sallam , Finance And Accounting Manager , CIEC

Depends on the materiality of these mistakes. If these are material we must make adjustment to these old statements if possible, if not so we should have its provision and note on the current year statement clarifications. But if these mistakes are inmaterial so there are no need for changes. 

Arif Dadani
من قبل Arif Dadani , Finance Manager , Dandy Company Ltd

Well it depends on materiality of mistake. One has to rectify the mistakes and make sure accounts give true and fair picture.

Urslan Ali
من قبل Urslan Ali , Supervisor Finance, Logistics , Sevens LLC - Al Naboodah Group

It depends upon materiality of discrepancies, if it affects the true and fair  view of the financial statements than prior year adjustments are must.

 

a better solution may be derived if you describe what are those discrepancies.

Hafiz Umer Ashiq
من قبل Hafiz Umer Ashiq , Accountant , Al Nefouth Electronics

first we have to check which part of the accounts has been affected. so according to that we create provisions. if the problem is not so big so we can also ignore that mistake..

Khurrum Iqbal
من قبل Khurrum Iqbal , Accountant , Akun Logistic Services

As long as bank balances and company' s book ledger are reconciled, no need of prior year's adjustment, provided  if there isn't a big difference in any particular head(s) which create unjustifiable difference from prior years. Otherwise prior year errors are adjusted against retained earnings or accumulated profits, after approval from the Management.

If accounts are audited then after reconciliation of differences it has to be highlighted to the auditor and after taken management's approval it will be adjusted against retained profits.

Adjustments in various similar heads will not be affected on overall profitability provided if there is manipulation b/w expenses and assets classification

Overstatement of receivables to show higher sale value or understatement in payables to depict less expenses that has to verified first from3rd party ledgers and source documents, if possible.

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