How do I make adjustments to prior years? - Balance Sheet

When making a prior year adjustment, you need to ensure that the adjustment is complete in the previous and current year in a particular way to ensure that this files successfully with HMRC and Companies House. You should follow the below routine.

Please note: The below instructions are for Balance Sheet related adjustments only, for Profit and Loss see 

How do I make adjustments to prior years? - Profit and Loss

1. Have the incorrect balances shown in the prior year
2. Bring forward the opening balances
3. Correct the prior year
4. Now make the adjustments required to bring the current year end accounts up to date. (You can do this either via the final trial balance or the transaction postings to bring you to your year-end position).

By doing the above, this means that you will not have to re-submit the previous year’s accounts as a correction and will also mean that the correction is implemented in the current year’s accounts so that you don’t have to account for this adjustment in future. We hope that the below worked example provides you with some additional clarification. 

Final Trial Balance Method

1. You should post your final trial balance as usual for the current year (not including the prior year adjustment)
2. Then you should include the adjustment for the prior year.
   1. Open the previous accounting period within Accounts Production
   2. Post the correction (Cr Bank £30,000, Dr Trade Debtors £30,000)
3. Then you should include the adjustment to the current year.
   1. Open the current accounting period within Accounts Production
   2. Post the correction (Cr Bank £30,000, Dr Trade Debtors £30,000). 
   3. Go to Accounts Setup > Accounts Presentation > Financial Statements > *Tick* Add the words 'as restated on the comparatives'
4. Check that you are now happy with the accounts.

Transactional Method

1. You should ensure that the details in the previous year are stated before the correction
2. You should open the current accounting period
3. Select Postings on the left hand menu
4. Bring Forward Opening Balances 
5. Go back to last year's accounting period 
6. Make the correction to amend last year's accounts (Cr Bank £30,000, Dr Trade Debtors £30,000)
7. Re-open the current accounting period and firstly ensure that you post the other movements in the year.
8. You should then post the correction required from last year (Cr Bank £30,000, Dr Trade Debtors £30,000). 
9. Check that you are now happy with the accounts.