What is Retrospective Restatement?
Retrospective restatement is the correction of a prior period error by adjusting the comparative information for the earliest prior period presented as if the error had never occurred. Under IAS 8, material prior period errors are corrected retrospectively, with disclosure of the nature and amount.
How It Works
- Identify the error and the periods it affected.
- Restate the comparative amounts in the financial statements.
- Restate opening retained earnings of the earliest period presented if the error precedes that date.
- Disclose the nature of the error and the effect of restatement.
Saudi Context
Saudi listed companies discovering material errors in prior years must restate Tadawul-published financials and file a corresponding announcement.
Example
If a SAR 5 million revenue was wrongly recognized in 2024, restate 2024 comparative revenue downward by SAR 5 million and adjust opening 2025 retained earnings.