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Prior period adjustment note (FRS 102 Section 1A)

Explain a corrected prior period error or a change of accounting policy, and the amounts restated.

Tax Optimiser Updated 12 Oct 2026

When last year's figures are restated, to correct a material error or because an accounting policy has changed, the accounts must explain what was changed and by how much. This note carries that explanation.

What this note shows

A text note describing the nature of the error or the change of policy, the line items restated and the amounts, and the effect on the reserves brought forward. The note is part of FRS 102 Section 1A accounts; it is not available in FRS 105 micro-entity accounts.

Where the figures come from

The note is wording only: the amounts are typed, not read from the trial balance. The restatement itself is made in the comparative figures of the trial balance, so make sure the comparatives and the opening reserves already reflect the correction before you describe it.

Completing the note in Tax Optimiser

Open the period, choose Accounts, then Notes in the left Actions menu. Select Prior period adjustment in the list.

  1. Set Show this note in the accounts to Yes.
  2. Click Use Template and choose the wording that fits, or type your own.
  3. Fill in the description and the amounts, and check them against the restated comparatives.
  4. Click Save changes to save the note and rebuild the accounts preview.

Wording templates

  • Correction of a prior period error – describes the error and states the line item restated, the effect on last year's profit and the effect on retained earnings brought forward. You are asked for {{ErrorDescription}}, {{LineItem}}, {{ComparativeEndDate}}, {{IncreasedOrReduced}}, {{Amount}}, {{ProfitEffect}} and {{ReservesEffect}}; the start date of the period is filled in for you.
  • Change in accounting policy – states the policy changed and why, and the amounts restated. You are asked for {{PolicyArea}}, {{Reason}}, {{LineItem}}, {{ComparativeEndDate}}, {{IncreasedOrReduced}}, {{Amount}} and {{ReservesEffect}}.

If a policy has changed, also complete the Changes in accounting policies accounting policy: see accounting policies.

What the note does not cover

  • It does not restate any figures. Change the comparatives in the trial balance.
  • The comparative columns are not headed "as restated" automatically. Say in the note that the comparatives have been restated.
  • A change in an accounting estimate, such as a revised useful life, is not a prior period adjustment and is not disclosed here.

Frequently asked questions

When is a prior period adjustment needed?

When a material error is found in an earlier period's accounts, or when an accounting policy is changed and the change is applied retrospectively. Immaterial errors are corrected in the current year.

Is a change of estimate a prior period adjustment?

No. A change in an estimate, such as a useful life or a bad debt provision, is accounted for in the current and future periods and the comparatives are not restated.

Do I need to amend the accounts already filed?

Not usually. The correction is normally made through the comparatives in the next set of accounts.

The short version

Prior period adjustment note (FRS 102 Section 1A) — in brief

The prior period adjustment note explains why last year's figures have been restated: the nature of the error or policy change, the line items and amounts affected, and the effect on reserves brought forward.

It is a text note with two templates. The amounts are typed in; the restatement itself is made in the comparative figures of the trial balance.

A change in an accounting estimate is not a prior period adjustment.