Method Changes, Errors, and Restatements

Method changes, errors, and subsequent events can alter reported amounts without changing the underlying transaction that originally occurred. The first analytical step is classification: a new accounting policy, a revised estimate based on new information, an error using information previously available, and an event after period end can require different presentation and disclosure.

Use Change in Accounting Policy to distinguish a policy change from an estimate update or error. Retrospective Application and Prospective Application explain how those classifications affect comparative periods.

For developments between period end and authorization or issuance, compare Adjusting Events with Non-Adjusting Events. Use Restatement when previously issued statements are corrected for an error.

Classification Checklist

• What information existed when the original statements were prepared?
• Did the underlying condition exist at the reporting date?
• Is the change caused by new information, a different acceptable policy, or a prior mistake?
• Which reporting framework and transition provisions apply?
• Are comparative periods revised, opening equity adjusted, or only current and future periods affected?
• Which statement lines, ratios, covenants, controls, and disclosures change?

IFRS Accounting Standards and U.S. GAAP use related but not always identical terminology and filing procedures. These pages provide educational analysis, not accounting, audit, tax, legal, or investment advice.

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