Accounting Standards Codification 250 (ASC 250) was released to address the more specific topic of correcting errors in prior period financial statements as well as adjusting current financial statements for changes in the method of accounting for certain things.
Often times during an audit, the auditors and/or clients will find an error that occurred in the prior year. Usually these are fairly small but they can sometimes be large, multi-million dollar errors that simply were not caught in the previous year due to statistical sampling.
On a fairly rare basis, a company will change Accounting policy and as a result, and changes to financial statements for changes in accounting policy. This ASC covers the guidance which you need to follow when this occurs.
For more in depth information on this and other FASB ASC topics, check out the following books.
*Technical versions of the standards, authoritative literature can be found in the Financial Accounting Standards Board website.
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