Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 14 – Adjustments to Beginning Net position, Fund Balances or Fund Net Position
Error Corrections

Since GASB 100 addresses the transactions or other events that will result in an adjustment to or restatement of prior periods, GASB concluded that a separate category for prior-period adjustments must be eliminated to remove redundancy and alleviate confusion.

An error can occur due to mathematical mistakes, mistakes in the application of accounting principles or oversight or misuse of facts that existed at the time the financial statements were issued about conditions that existed as of the financial statement date.

Reporting

Agencies must retroactively report error corrections by restating all prior periods presents. There is no practicability exception. Agencies must also make changes to any Required Supplementary Information (RSI) previously reported and included in the report for all impacted prior periods. The cumulative effect of the error correction on periods prior to those presented must be reported as a restatement of beginning net position, fund balance or fund net position (as applicable) for the earliest period presented. Each individual prior period presented must be restated to reflect the period-specific effects of correcting the error.

Disclosure

Agencies must make the following disclosures in the financial statement notes for each error correction:

• The nature of the error and its correction, including the periods affected by the error and identification of the financial statement line items (excluding totals and subtotals) affected by the correction. The identification of the line item is an expansion to previous guidance.
• The effect of the error correction on the change in net position, fund balance or fund net position (as applicable) for the prior period.
• The effects on beginning net position, fund balance or fund net position (as applicable).