DEFINITION of 'Accounting Changes And Error Correction'

Requirements for the accounting for and reporting of a change in accounting principle, change in accounting estimate, change in reporting entity or the correction of a transaction. Accounting Changes and Error Correction is a pronouncement made by the Financial Accounting Standards Board (FASB) and is a Statement of Financial Accounting Standards (SFAS). It outlines the rules for correcting and applying changes to financial statements. This pronouncement, Number 154, replaced FASB Statement No. 3 and the Accounting Principle Board (APB) Opinion No. 20. It was issued in May 2005.

BREAKING DOWN 'Accounting Changes And Error Correction'

The two primary accounting standards bodies, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), have different interpretations of accounting rules and principles but do work together to create some uniformity when possible. The Accounting Changes and Error Correction pronouncement is similar to the IASB's "Accounting Policies, Changes in Accounting Estimates and Errors" released in 2003.

RELATED TERMS
  1. Financial Accounting Standards ...

    A seven-member independent board consisting of accounting professionals ...
  2. Error Of Principle

    An error of principle is an accounting mistake in which an entry ...
  3. APB Opinion

    An authoritative pronouncement issued by the Accounting Principles ...
  4. Accounting Change

    An accounting change is an accounting method considered a bigger ...
  5. International Accounting Standards ...

    An older set of standards stating how particular types of transactions ...
  6. Hierarchy Of GAAP

    The Hierarchy of GAAP refers to a four-level framework that classifies ...
Related Articles
  1. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  2. Investing

    GAAP

    Learn more about the generally accepted accounting principles, standards and procedures that companies use to compile their financial statements.
  3. Investing

    Footnotes: Early Warning Signs For Investors

    These documents hold very important information, but reading them takes skill.
  4. Investing

    What are Financial Statements?

    Financial statements are a picture of a company’s financial health for a given period of time at a given point in time. The statements provide a collection of data about a company’s financial ...
  5. Investing

    The Best Investment Accounts for Young Investors

    What are the best investment accounts for young investors? A few types to consider.
  6. Insights

    A Look At Accounting Careers

    More than just crunching numbers, this career blends detective work with trouble shooting.
RELATED FAQS
  1. What are the differences between a change in accounting principle and a change in ...

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants ... Read Answer >>
  2. How should an accountant correctly record and report a change in an accounting estimate?

    Read about how the FASB treats a change in accounting estimate and what businesses are required to report or disclose when ... Read Answer >>
  3. How does the Financial Accounting Standards Board (FASB) establish accounting protocol?

    Find out how the Financial Accounting Standards Board or FASB, identifies possible financial reporting issues and determines ... Read Answer >>
  4. How should a change in accounting principle be recorded and reported?

    Learn about changes in accounting principle and why businesses make them, as well as the reporting and recording requirements ... Read Answer >>
  5. When and why were GAAP first established?

    Take a deeper look into the development and purpose of the generally accepted accounting principles, also known as GAAP, ... Read Answer >>
  6. Who enforces GAAP?

    Take a deeper look at the private enforcement mechanisms behind the generally accepted accounting principles for American ... Read Answer >>
Hot Definitions
  1. Return on Assets - ROA

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
  2. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  3. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  4. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  5. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
Trading Center