A faulty recognition, measurement, presentation or disclosure of an element/ item or more of previously issued financial statements (statements of a prior period/ periods). Prior period errors are omissions from, and misstatements in, an entity’s financial statements for one prior period or more arising from a misuse, inability to use, or lack of access to, reliable information, whether available or assumed to be available and taken into consideration in preparing financial statements.

Accounting errors, intentional and/ or unintentional, result from mathematical mistakes, application mistakes (in relation to standards/ policies/ procedures), oversights or misinterpretations of facts, and fraud (intentional action). Errors do vary in terms of materiality. Material errors could arise from incorrect, false or misleading information that “materially” (excessively or to a great extent) affects an entity’s financial reporting, and as a result its decisions and those of the users of its financial statements.

Material errors in previously issued financial statements must be corrected (correction of errors) through formal restatement. Immaterial errors (those judged by management to be immaterial) may be left simply overlooked- i.e., uncorrected, or may be corrected either by means of informal revision (presentation of prior period columns in of the financial statements of a current year or the year in which an error has been identified), or by a catch-up adjustment (less visible intervention) to such statements.