Correction of Error In Prior Financial Statements - RestatementA. Error in prior period financial statementsA. Error in prior period financial statements --An error in a prior period financial statement is caused when information existed at the time the statements were prepared enabling correct reporting, but a misstatement was made causing erroneous recognition, measurement, or disclosure. The presumption is that the correct reporting could have been accomplished in the past. Errors made in the current year but discovered before the closing process are corrected without special procedures.1. Recall that the change from an inappropriate accounting principle to one that is generally accepted is considered an error correction.2. Changes in estimates that reflect negligence or that were made in bad faith are also considered error corrections.
