previous year audit adjusted not posted

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Hi All,

Really stuck and feeling quite stupid.
I did audit of this client last year and gave them audit adj which they did not post. This year i get to audi them again and of course opening retained earning not matching because not posting AA. Now i am thinking to do one line item in Changes of Equity 'Prior year adjustment' as one line with net effect of last year's AA. I wonder should this be a double entry or just a line in COE with notes is fine?
I never come across these issues, it is very natural for clients not to do things but this time i am just feeling very weird! Please help!
 

DTA93433

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I think both are required. A double entry to the ledger as well as it being reported as an adj. to R/E on the balance sheet.
 
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I think both are required. A double entry to the ledger as well as it being reported as an adj. to R/E on the balance sheet.
Thanks for your reply. I agree what you said however i decided to make them post audit adjustment for 2015 and 2016 ( new) and for the audit report i show as one line. Because no matter what i do if they dont post to ledger same problem will occur each year.
 

Fidget

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Probably doesn't need saying, but if they don't make the adjustment then you can't force them to. All you can do is draw attention to it in your audit report giving it whatever level of emphasis is needed based on your/your firm's judgement on the issue.
 

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