Handbooks | October 2020

 

Insight

Handbook: Accounting changes and error corrections

The new KPMG in-depth guide to the accounting and presentation requirements of ASC 250.

Julie Santoro

Julie Santoro

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-1086

Brian Fields

Brian Fields

Partner, Dept. of Professional Practice, KPMG US

+1 212-872-3397

Tim Phelps

Tim Phelps

Partner, Dept. of Professional Practice, KPMG US

+1 212 872 3249


Using Q&As and examples, this guide explains in depth how to identify, account for and present the different types of accounting changes and error corrections.

Applicability

  • All entities

Relevant dates

  • Effective immediately

 Key impacts

  • Accounting changes comprise changes in accounting principle (mandatory or voluntary), changes in accounting estimates and changes in reporting entity.
  • Mandatory changes in accounting principle (e.g. to adopt an ASU) follow the specifically mandated transition.
  • Voluntary changes in accounting principle and reporting entity generally require comparative financial information to be adjusted.
  • Unless mandated, an accounting principle can only be changed if the new principle is ‘preferable’.
  • A material prior-period error is corrected by restating and reissuing the prior-period financial statements. An error can be material by its size and/or its nature. 

Report contents

  • Scope and materiality
  • Accounting changes
  • Error corrections
  • Interim reporting
  • SEC registrants

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