PRIOR YEAR ADJUSTMENT – IFRSs GUIDELINE (1)

Financial statements are required to faithfully represent the transactions and events of a company for a reporting period. This means that financial statements should be complete, neutral and free from error. To achieve this, it is emphasized that management should establish sound accounting and internal control systems to ensure the sanctity of financial reporting. But sometimes, accountants could make mistakes in reporting certain transactions. Such errors include mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.  If such errors are detected in the current period, then fine, it can be corrected. But often times, these errors are not detected until another accounting year. The correction of these errors in another accounting year, therefore, would lead to prior year adjustment. Prior year adjustment is therefore a means of correcting past financial statements that were misstated due to errors.

SURVIVING A RECESSION – THINGS TO DO

Today’s piece is not on dividend or any other accounting term. This piece is in response to happenings in Nigeria, and other parts of the world. Well, accountants are social beings too, and we are also affected one way or the other by the happenings. The Central Bank of Nigeria (CBN) recently succumbed to using the word ‘recession’ to describe the Nigeria economy, even though the writing on the wall has suggested so for so long. The drop in the price of crude oil which has starved the country of needed foreign exchange, coupled with the renaissance of militancy in the oil rich Niger Delta region have put the economy in comatose with the Buhari-led government trying so hard to keep things in shape.

Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. The second quarter is almost rounding off already, and there are no indications that things are changing rapidly. So, Nigeria is heading to recession, if we are not there already. What can we do in these trying times? I have taken some time to do some soul searching and research, and I have come up with the following points: