A type of accounting restatement that involves the correction of an immaterial error to the prior period financial statements. Notwithstanding the immateriality of an error, correction may materially impact the financial statements of the current period for which it is required. In other words, an immaterial error that has been left uncorrected for multiple periods may add up to a material proportion and as a result impact the statements of the current year “materially”. For revision restatements, an error is corrected in the current year’s comparative financial statements by restating (i.e., adjusting) the prior period’s information and disclosing the error in the current year’s financials.
If the prior period’s financial statements are not considered to be materially misstated, the reporting entity is not required to communicate that to users, as the prior period’s financials can still be reliable for their decision making. A correction of an immaterial error is referred to as an “adjustment” or “revision” of a prior period’s financial statements, which necessitate a clear disclosure about its nature and impact on the financial statements within the footnotes (explanatory notes).
The correction of an immaterial error does not entail a revision of an auditor’s opinion. Furthermore, it does not require labeling of column headings in the financials.
This restatement is also known as a little R restatement.
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