Finding an error in company accounts calls for a clear assessment, not an immediate attempt to edit the number until it looks right. The accountant needs to know what happened, which period is affected, whether the accounts have been approved or filed and what other reports rely on the figure.
In this article
- Describe and quantify the error
- Keep the supporting evidence
- Agree the correction required
- Check related filings and records
Some issues are simple bookkeeping corrections. Others affect prior-year reporting, tax returns or decisions already made using the accounts. A controlled process preserves evidence and makes the resulting correction understandable to directors and future reviewers.
Describe the error precisely
Write a short summary with the amount, transaction, original treatment and reason it appears wrong. Attach the invoice, statement, agreement or calculation supporting the concern. Identify when the issue was discovered and who has already changed anything.
Distinguish an error from new information affecting an estimate. A customer debt becoming doubtful after accounts were prepared is not automatically proof that the original assessment was wrong. Explain what was known at the time and what changed later.
Avoid deleting the original transaction or replacing a final file before the accountant has assessed it. Preserve a copy of the records as they stood when the problem was found.
Establish the reporting status
| Status | Question for the accountant |
|---|---|
| Books still open | How should the entry be corrected with evidence? |
| Draft accounts prepared | Which draft figures and schedules need updating? |
| Accounts approved but not filed | Is renewed approval or other action needed? |
| Accounts already filed | Are amended accounts and related notifications needed? |
| Tax returns already submitted | Which correction route and deadline applies? |
The amount is only part of the assessment. An apparently small error can affect a sensitive balance, shareholder transaction or compliance question. Conversely, not every typo requires a full financial restatement. Materiality and the applicable reporting requirements need professional judgement.
Trace the effect through the accounts
Illustrative example: a £2,400 equipment purchase was entered twice. Removing the duplicate may affect the asset cost, supplier balance or bank allocation and depreciation calculations. If a tax claim used the duplicated cost, the tax position also needs review.
Do not correct only the headline asset total while leaving the duplicate supplier invoice outstanding. Trace the original entries and related schedules. The correct adjustment depends on what was actually recorded and whether payment was duplicated too.
Ask for a before-and-after summary showing each affected balance, profit effect and any resulting change to tax calculations. That is more useful for approval than an unexplained journal described only as “accounts correction”.
Assess prior-period treatment
Under FRS 102, section 10, material prior-period errors must be corrected retrospectively to the extent practicable. Confirm the reporting framework and appropriate disclosures with the accountant.
Do not assume that entering everything into the current year solves the problem. It could distort current performance and leave the earlier accounts misleading. Equally, do not reopen every historical period without considering the nature and significance of the issue.
Keep the accounting assessment separate from the filing procedure. A decision about comparative figures does not, by itself, establish exactly what needs to be submitted to Companies House or HMRC.
Follow the applicable filing route
Companies House guidance says amended accounts must cover the original period. Submission can be on paper or through supported filing software in the circumstances described. Original accounts remain on the register; filing amendments does not erase the earlier version.
Agree who prepares, approves and submits the corrected documents. Check the required statements and signatures for the chosen route, retain the filed version and obtain evidence of acceptance. If only part is amended, follow the specific procedure rather than sending an informal explanatory email.
Tax returns need separate attention. HMRC says Company Tax Return amendments usually have a twelve-month window from the filing deadline. Outside that window, different routes may apply. Raise underpaid tax promptly with the accountant and review interest or penalty implications on the actual facts.
VAT, payroll and shareholders’ personal returns can have their own correction processes. Do not assume that an amended set of company accounts automatically updates them.
Prevent recurrence
Keep an error log covering cause, correction, approval, affected reports and completion evidence. Identify whether the source was duplicate import, poor cut-off, misunderstood finance or a missing review.
Change the control that failed: invoice duplicate checks, asset-register reconciliation or documented approval of unusual entries. EPOS financial accounts services and tax support are relevant destinations for discussing the accounts and return implications together.