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Annual Adjustments
According to Iranian accounting standards, annual adjustments, ie items related to previous years that are included in the adjustment of the accumulated profit (loss) balance at the beginning of the period, are limited to items that are not related to changes in accounting procedures and corrections. The effect of annual adjustments should be reflected in the financial statements by adjusting the accumulated profit (loss) balance at the beginning of the period. Comparative items of the financial statements should also be resubmitted, unless this is not practical. In such circumstances, the matter should be disclosed in the explanatory notes. The amount and nature of the items constituting the annual adjustments and the reasons for the change in accounting procedure, as well as the fact that the comparative items of the financial statements have been re-presented (or not re-presented) shall be disclosed in the disclosure notes.
Change in accounting practices
In order to achieve the qualitative characteristic of comparability of financial statements, it is necessary to maintain consistency in the accounting practices during each financial period and from one financial period to the next. Therefore, no change in accounting procedures should be made unless the change in accounting procedure is justified by the preference of the new procedure over the previous procedure, in terms of presenting the financial statements of the business unit more favorably, or the change in the accounting procedure is justified by the following forces or regulations. New accounting, mandatory be. One of the characteristics of a change in accounting method is that it is the result of a choice between two or more accounting methods. If a transaction or event that is clearly different in nature from previous transactions and events requires the adoption of a new method or modification of an existing method, the adoption or modification of the method shall not be considered a change of accounting method.
Error Correction
Errors in the financial statements of one or more previous financial periods may be discovered in the current period. These errors can be caused by:
A. mathematical errors,
b. Errors in the application of accounting procedures,
c. Misinterpretation or ignoring of facts at the time of preparation of financial statements, d. Change from a non-standard accounting procedure to a standard accounting procedure, and . Cases of fraud.
The correction of these errors, if not material, shall be recognized in the net profit or loss of the current period. In some cases, financial statements published one or more periods ago may contain significant errors that distort the desired picture and thus reduce the reliability of the financial statements. Such errors should not be corrected by including them in the current year’s profit and loss, but should be achieved by re-presenting the financial statements of the previous year(s). As a result, the opening balance of the accumulated profit (loss) will also be adjusted accordingly.
Annual adjustments resulting from the correction of errors are also reflected as the last item in the case of comprehensive profit and loss.
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