USA Prior year correction - Public Company


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I have identified and error within one of our balance sheet accounts that was for the prior year. We have closed out that fiscal year, filed our 10-K, and have successfully passed our audit.

I was told that since this error was for the prior year, I should leave it alone and not correct it in the current year and to just carry the incorrect balance of this account forward until the end of time. The reasoning I was given is that the during the audit, the auditors found a lot of other items that were incorrect but we "passed" on making the adjustment because it was immaterial. Does this ultimately mean that we never adjust it just because we passed on it during the audit?

This is my first time working for a public company so I'm seeking guidance because it just doesn't sound right to me as an accounting professional to leave an incorrect balance sheet to roll forward when you know it's incorrect.

Thank you in advance!
 
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bklynboy

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You adjust in the current period instead of reopening the books or touching Retained Earnings. If its immaterial just book to current period by fixing the BS account and offsetting where the other side goes (probably the income statement)
 

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