Knowledgebase Support HMRC Useful links
Knowledgebase home
Tax Return Production
Accounts Production
Client Hub
Practice Management
VAT Filer
CloudConnect
Anti-Money Laundering
Support home
Hot Topics
SimpleStep Guides
Release Notes
Technical
Known Issues

HMRC Status
Useful Links
Accountancy Practices
and Tax Advisors
 
Individuals, Businesses, Trusts
and Partnerships
SOFTWARE
Client Hub
Accounts Production
Tax Return Production
VAT Filer
Company Incorporator
Companies House Forms
Companies House Integration
GDPR Centre
eSign Centre


SERVICES
CloudConnect
AML Identity Checking
TAX SOFTWARE
Individual
Limited Company
Partnership
Trust


VAT SOFTWARE
VAT Filer for Business

How do I make adjustments to prior years?

Article ID: 2084
Last updated: 07 Apr, 2017

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 Profit and Loss related adjustments only

  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 Sales £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 Prior year adjustment £30,000, Dr Trade Debtors £30,000). PLEASE NOTE: This should not be posted to code 8000 as this will not include the headings for as restated which you will need. 
  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 - this will ensure that the P&L b/f code (8000) will have the incorrect brought forward balance
  5. Go back to last year's accounting period 
  6. Make the correction to amend last year's accounts (Cr Sales £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 Prior year adjustment £30,000, Dr Trade Debtors £30,000). PLEASE NOTE: This should not be posted to code 8000 as this will not include the headings for as restated which you will need. 
  9. Check that you are now happy with the accounts. 
Article ID: 2084
Last updated: 07 Apr, 2017
Revision: 11
Views: 11553
This article was:  


Also listed in
folder Accounts Production -> General Use