Ind As 8
Ind As 8
Ind As 8
In the case of an error, there may be rare circumstances when the impact of error in
financial statements is so overwhelming that they may become completely unreliable. In
such cases, the company may need to withdraw the issued financial statements and reissue
the same after correction. The auditor may also choose to withdraw their audit report.
However in majority cases the impact of the error will not be so overwhelming requiring
withdrawal of already issued financial statements.
View: Section 131 of the Act is triggered only in cases where the company needs to
withdraw previously issued financial statements and re-issue the same. For example, this
will be required when the impact of error on previously issued financial statements is so
overwhelming that they have become completely unreliable.
Ref: Section 131- It is about preparing (and consequently reissuing) revised financial
statements, at the behest of the board of directors. Section 131 can be triggered only if the
previously issued financial statements were not in compliance with section 129.
Estimates need revision as changes occur in the circumstances on which they are based or
as a result of new information or more experience. Ind AS requires change in an accounting
estimate to be accounted prospectively. Accounting estimates by their nature are
approximation which may need updation as additional information becomes known.
Financial reporting is not immune to errors. Errors are generally infrequent in nature and
can be distinguished from change in estimates.
Errors arise from failure to use or misuse of reliable information already available or that
could reasonably be expected to be obtained.
An entity that adopts Ind AS for the first time needs to assess carefully the impact of
information that has become available since it prepared its most recent previous GAAP
financial statements because the new information:
Ind AS 101 requires any error under the previous GAAP to be disclosed separately in the
reconciliation from previous GAAP to Ind AS. Errors cannot be recognized as transitional
adjustments or clubbed with the effect of changes in accounting policies.
In case of Ind AS issued but not effective, a conservative view is to provide a complete list of
such Ind AS. In case a complete list is not provided, it may be wise to include a statement to
the effect that the impact of all other IndAS not yet adopted is not likely to be material.
Income tax effect is part of the retrospective adjustment. The tax effects of corrections of
prior period errors and of retrospective adjustments due to changes in accounting policies
are accounted for and disclosed in accordance with Ind AS 12 Income Taxes.