Errors in accounting are an incorrect reflection or lack of fixing of facts in the company’s activities. If errors and possible consequences are set up, the accountant should without fail correct them. When correcting errors, one should be guide by the provisions of the current legislation – PBU 22/2010.
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If errors are found in accounting and reporting for the past period, they should be corrected in a certain way. The order in which this correction is made will depend on when the mistake was made and how significant it is.
Why Errors Occur
According to the provisions of PBU 22/2010, accounting errors are cause by such criteria and factors as:
incorrect application of the laws of the Russian Federation and regulatory documents in the field of accounting;
- inaccurate calculations;
- incorrect accounting policy in the company;
- incorrect information that is available at the time of signing the reporting;
- inaccurate assessment of the fact of the organization’s activities;
- dishonest activity or inaction of officials.
What are the mistakes?
There are two types of accounting errors. These are significant and non-essential errors. A material error is under stood to mean an error that, in one reporting period. By itself or together with other errors, is capable of influencing an economic decision made based on the accounting records of this reporting period.
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The enterprise itself determines how significant the error is, taking into account the nature and size of the relevant accounting item. Determining its materiality, they take into account how the error affects all indicators presented in the accounting statements, including several comparative indicators of all previous periods presented in this statement and indicators of the reporting year.
How do fix significant errors?
There are two ways to fix a significant error:
- Recalculation of comparative indicators of accounting records for reporting periods. Which were reflect in the reporting of the enterprise for the reporting year. The exception is cases when it is not possible to associate an error with a certain period or it is impossible to reveal its influence by a cumulative total regarding previous periods.
- By recording the relevant account accounting in the current reporting period. The offsetting account in the records is the account for accounting for uncovered loss (retained earnings), i.e. account 84.
What about minor bugs?
As stated in paragraph 14 of PBU, such errors are rectify by entries in the relevant accounting accounts in the month of the reporting year in which the error was find. Losses or profits that arose as a result of correcting this error should be write down in the expenses of the current reporting period or other income, i.e. in correspondence with account 91.
Even with the most responsible attitude to accounting, it is not possible to completely protect the company from accounting errors. This means that it is necessary to take appropriate measures and timely identify and eliminate the consequences of errors in reporting and accounting.
It is better not to deal with accounting and tax accounting on your own. But to delegate authority to professionals who will competently eliminate errors. For all questions in this area, please contact the specialists in the company “Capital tax consultation”!
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