Disclosures are generally not required for immaterial out-of-period adjustments. /SM 0.02 Under this approach, the entity would correct the error in the current year comparative financial statements by adjusting the prior period information and adding disclosure of the error, as described below. The San Francisco-based researcher of consumer transactions said 13.1 million U.S. consumers were fraud victims last year, up by more than 500,000 from the prior year and the second-highest number . Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. The financial statement compilation should include a clear "Notice to Reader" heading to denote that it may not be appropriate for the user's purposes. In this scenario, the revision to break out impairment changes on intangible assets to its own line on the statement of operations would be a change in presentation from one acceptable method to another acceptable method, and it would be appropriate to disclose this change as a reclassification. Changes in the classification of financial statement line items in previously issued financial statements generally do not require restatements, unless the change represents the correction of an error (i.e., a misapplication of GAAP in the prior period). 109 0 obj <>/Filter/FlateDecode/ID[<3B4E31A13ADD224C906062A244A3BC02><976923D32A4A3241AAC8A366D0066A5D>]/Index[89 48]/Info 88 0 R/Length 98/Prev 148161/Root 90 0 R/Size 137/Type/XRef/W[1 2 1]>>stream I did not audit or review the financial statements nor was I required to perform any procedures to verify the accuracy or completeness of the information provided by management. uQ\#o!$CD6y|`#qB1czHOP?L[,;^J{;ij! Disclosures The Divisions decision not to seek the filing of additional reports when a registrant files a comprehensive annual report does not absolve a registrant from any liability under the Exchange Act for failing to file all required reports and would not foreclose enforcement action for the registrants filing delinquencies. Go to the financial statements for the accounting period in which the error occurred. Therefore, the entity is obligated to notify users of the financial statements that those financial statements and the related auditors report can no longer be relied upon. Indeed, approximately one-quarter of audit claims asserted against CPA firms in the AICPA Professional Liability Insurance Program are brought by third parties. In these situations, management should work closely with its securities counsel and auditors and may need to discuss its approach with the SEC staff, stock exchanges, or other regulatory agencies about the measures to be taken given the facts and circumstances.
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