Reclassification adjustments from statutory books to IFRS for the current and prior years

Corrections in the transition from statutory books to IFRS are of great importance to ensure that financial statements are accurate and reliable. Identifying accounting errors made in past periods and correcting them using appropriate methods plays a crucial role in creating financial statements that comply with IFRS standards.

These corrections are not limited to the current year but may also require the rectification of errors from previous years. A proper correction process ensures that financial statements are arranged in compliance with IFRS. Correcting errors from past years directly affects both the financial statements of that period and the comparative tables.

Key Considerations in the Error Correction Process

In the error correction process, it is essential that accounting policies and practices are in full compliance with IFRS. During the error identification stage, it's important to carefully examine whether the errors are simply mistakes in accounting entries or inaccuracies affecting previously reported financial statements.

When performing corrections, it is important to consider how the income and expense items of the relevant period and other financial statement components are affected. Correcting errors is crucial for maintaining the consistency of financial statements. Additionally, any potential impacts on equity during the correction process should also be considered. All these correction processes must be meticulously applied to accounting records and be traceable from an audit perspective.

How to Correct Errors for the Current and Previous Years?

Corrections for the current year are typically made by correcting errors identified within the current accounting period. Such errors are reflected in the current year's income and expense accounts, and necessary adjustments are made on financial statements. During the correction of current year errors, it is essential to make correction entries in compliance with IFRS standards.

Correcting errors from previous years requires a different process. According to IFRS standards, errors made in past periods should be corrected retrospectively. Correcting such errors necessitates the restatement of financial statements from previous years. Since errors from previous years may also affect comparative tables in financial reporting, it is important to present corrected financial statements in a comparative manner. Detailed explanations of the corrections made and their disclosure in financial reports are required.

How to Apply Correction Entries to the Accounting System?

Applying correction entries correctly to accounting systems is essential for the successful completion of the transition to IFRS. When correcting errors from the current and previous years, accounting systems must be structured to accommodate these corrections. Initially, existing records in the accounting system should be reviewed according to IFRS standards, and items containing errors should be identified.

During correction processes, the reporting and data analysis features provided by accounting systems are utilized. These features help in correcting errors more quickly and accurately. In the correction process, it is crucial to classify records correctly through the system, and to revalue assets and liabilities in accordance with IFRS. Each correction entry should be trackable in audit processes and recorded comprehensively in the accounting system.

Applying correction entries to the accounting system has direct impacts on financial statements. Therefore, every correction entry should be accurately reflected in financial statements, and comparative tables should be reorganized if necessary.