When a third balance sheet is required
The three events that put an opening statement of financial position into a client's statements, how to date it and where its figures come from.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Most sets of annual financial statements carry two columns: this year and last year. Now and then a reviewer writes on the draft that the set needs a third, a statement of financial position dated at the start of the comparative year, and the team has to decide whether that is really required and where the numbers will come from.
The question tends to arrive late. A prior-year error turns up during the audit, or the client changes a policy, and the draft that was nearly finished suddenly reaches back two years. Handled well, the extra column shows readers the corrected starting point. Handled badly, it is a column of figures nobody can trace.
Here is what the standard asks for, how to date the column, and how to build it from evidence a reviewer can follow.
Three events that bring in the opening column
IAS 1 requires a complete set of financial statements at least annually, with comparative amounts for the preceding year, including comparatives in the notes. The IFRS Foundation's summary of the standard adds that the complete set also includes a statement of financial position as at the beginning of the preceding comparative period when the entity does one of three things:
- applies an accounting policy retrospectively;
- makes a retrospective restatement of items in its financial statements; or
- reclassifies items in its financial statements.
IAS 8 tells you when the first two happen. A change in accounting policy is applied retrospectively unless that is impracticable or another standard sets its own transitional provisions. A material prior period error is corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred, unless the effects cannot practicably be determined.
A change in an accounting estimate is different. IAS 8 has its effect recognised prospectively, in the period of the change and, where relevant, future periods, so revising a useful life or a provision estimate does not on its own call for the extra column.
The IFRS Foundation's IAS 1 page summarises these presentation requirements. Read the standard's full text for the precise conditions and the disclosures that travel with the opening statement. The Foundation separately records, on its IFRS 18 page, that IFRS 18 replaces IAS 1 for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted, so a client that moves to IFRS 18 should be checked against that standard's own wording.
Working out the date
"The beginning of the preceding comparative period" reads like a riddle, so take a client whose financial year follows the calendar and which is preparing statements for the year ended 31 December 2025.
- The current period is 2025.
- The preceding comparative period is 2024.
- The beginning of that period is 1 January 2024, which in practice is the closing position at 31 December 2023.
The statement of financial position then shows three dates: 31 December 2025, 31 December 2024 and 1 January 2024, with the last two marked as restated or reclassified where they differ from what was first issued. For a client with a March or June year-end, count back the same way to the first day of its comparative year.
The opening column carries the position after the correction, policy change or reclassification. It is not a reprint of the original figures.
Where the opening figures come from
The opening column is built, not invented. Its starting point is already in the client's issued statements: last year's set showed the closing position of the year before as its own comparative column. From there:
- Copy the issued balances for that earlier date, line by line, and keep a reference to the page they came from.
- List every adjustment that reaches back to that date: the cumulative effect of the policy change, the part of the error that already existed at the start of the comparative year, or the lines being moved.
- Separate equity effects from line moves. A restatement usually changes opening equity; a reclassification usually changes lines but not totals.
- Prove the bridge. The movement from the restated opening column to the restated comparative column should be explained by the comparative year's restated results and other equity movements. If it is not, something has been missed.
- Have someone else review it before the column goes into the draft.
How Achekam handles the comparatives behind it
Achekam's financial statements Studio takes comparative figures from three places: figures a person types, last year's issued statements, or a prior-year set that a person reviews. When last year's statements were not prepared on Achekam, staff can upload them as a PDF, and Achekam reads them into figures that a person reviews and approves before they are used as comparatives. Where AI is available it fills in details such as the entity name, never the numbers.
That gives the team a reviewed, sourced record of what the client actually issued, which is the right base for any restatement. The corrections themselves go in as year-end adjusting entries in the Studio, and an entry that turns out to be wrong is reversed with a record of who reversed it and why rather than deleted. A reviewer can follow the path from the issued figure to the restated one.
One limit to be plain about: none of these features is described as producing the opening statement of financial position for you. Treat the opening column as a schedule your team prepares, cross-references to its sources and has reviewed, then presents in the set beside the current and comparative figures.
Telling the reader what changed
An unexplained third column confuses the very people it is meant to help. The note dealing with the restatement or policy change should cover:
| What the reader needs | Where it goes |
|---|---|
| What changed and why: the error found, the new policy and its reason, or the reclassification | The note on the change |
| Which line items moved, at each date shown | The same note, line by line |
| The effect on opening equity | The note and the statement of changes in equity |
| Which columns are restated or reclassified | The column headings on the face of the statements |
For the restatement itself, correcting a prior period error walks through the entries and disclosures, and comparatives and the cash flow column covers the knock-on effect on the other primary statements. If the team is unsure whether a change is a policy or an estimate, settle that first with change in estimate or policy, because the answer decides whether the opening column is needed at all.
A useful habit: add one question to the firm's completion checklist. Did anything this year change what last year's statements said, or move items between lines? If the answer is yes, decide on the opening column before the draft goes to the partner, not after.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
