You do not fix last year’s error retrospectively in already-closed financial statements, but in the current open period. A material error is booked through the balance sheet via retained earnings or accumulated losses of prior years (accounts 428 and 429), an immaterial one through the current year’s income and expenses. If the error affected the income-tax base, you must file an amended tax return by the end of the month after you discover it.
What counts as a prior-period accounting error?
It is any case where it later turns out the accounts for a closed period did not reflect reality. Typically a wrongly booked document, an invoice that never entered the books that year, an incorrect depreciation rate, a missing valuation allowance or a mix-up of accounts. The Slovak Accounting Act (431/2002) requires the statements to give a true and fair view — which is exactly why a discovered error must be corrected.
Importantly, an already closed and approved accounting period is not reopened. When you spot the error only after the statements have been approved, you do not rewrite last year’s books — you carry the correction into the currently open year. If the previous year’s statements have not yet been prepared, the correction goes directly into them. How you book it then depends on whether the error is material.
When is an error material and when immaterial?
The Accounting Act sets no fixed amount or percentage above which an error is automatically material. What matters is whether the error could influence the judgement of a user of the financial statements — a bank, a shareholder, an investor or the tax office. Information is material when omitting or misstating it changes the view of the company’s assets, liabilities and result.
Each company therefore sets its own materiality threshold in an internal directive and should apply it consistently. In practice the criterion is often tied to a percentage of net turnover, the balance-sheet total or the result. Example: a forgotten supplier invoice of €80 is immaterial for a company with turnover in the millions, while the same amount at a micro-business with turnover of a few thousand euros may already be material. Without an internal rule this assessment is hard and inconsistent.
How is a material prior-year error booked?
Under the accounting procedures for entrepreneurs, a material error is booked through the balance sheet — via equity accounts, not through the current year’s profit and loss. If the correction increases past profit, account 428 – Retained earnings of prior years is used; if it corrects a loss, account 429 – Accumulated losses of prior years. As a result the correction does not distort the current period’s result — it neither raises nor lowers this year’s profit, to which it does not belong.
Example: in 2026 you find that revenue of €12,000 was not booked for 2024. Instead of adding it to this year’s sales, you record the receivable against account 428. Users of the statements can then see it is a subsequent correction of the past, not real current-year performance. This logic protects the comparability of results between years.
How do you correct an immaterial error?
An immaterial error is booked more simply — through profit and loss in the current period, to the expense (group 5) or revenue (group 6) accounts to which it relates. So if a small expense “dropped out” of last year, you simply book it into this year’s expenses; a missing minor revenue goes into revenue. You do not need to touch equity.
Even for an immaterial error, the correction must be documented and traceable — with an accounting document explaining what the correction concerns and why it arose. Order in your records is the best prevention of all. How to set up accounting so you avoid repeated mistakes is something we address in our overview of professional accounting in Slovakia.
When must you file an amended tax return?
The accounting fix is one thing, tax another. If the error affected the income-tax base of a past year and the tax should have been higher, an obligation arises to file an amended tax return. Under the Tax Code (563/2009) it must be filed by the end of the month following the month in which you discovered the reason — and the tax difference is due within the same deadline.
An amended return can be filed until the right to assess the tax lapses, generally five years from the end of the year in which the duty to file the original return arose. It is not only about underpayments — an amended return can also reduce your tax if you paid too much. See also our Slovak tax advisory overview.
What penalties apply when the correction affects tax?
If you correct the error yourself through a voluntarily filed amended return, the tax authority imposes a penalty tied to the European Central Bank base rate, but at least 3% per year of the additionally assessed tax — calculated from the original deadline to the filing of the amended return. If the tax were assessed only by an auditor, the rates are noticeably higher. On top of the penalty, late-payment interest applies for each day until the tax is paid.
That is why it is cheapest to admit the error as early as possible yourself — the penalty rate on a voluntary correction is the lowest available.
How can you avoid error corrections?
Most errors can be prevented by keeping documents in order and booking continuously rather than at the last minute. A clear internal materiality directive, regular reconciliation of account balances and a check that all invoices are booked in the right period all help.
When an error does occur, the key is to separate two views: the accounting correction (material via 428/429, immaterial into income and expenses) and the tax settlement (an amended return if the tax base moves). Anyone who keeps these two levels apart and documents the correction will pass any inspection without needless stress.
Found a wrongly booked entry from last year and unsure whether it is a material error or whether an amended return is needed? We are glad to assess it with you and handle both the accounting correction and the tax settlement.
FAQ
Can I fix the error directly in last year’s financial statements?
No, if the previous period’s statements have already been prepared and approved. A closed accounting period is not reopened. You correct the error in the current open period — a material one via accounts 428 or 429, an immaterial one through this year’s income and expenses. If the statements have not yet been prepared, the correction goes directly into them.
When is a prior-period error material?
The Accounting Act sets no specific amount. An error is material when it could influence a user’s judgement of the company’s assets, liabilities and result. Each company sets its materiality threshold in an internal directive, often as a percentage of turnover, the balance-sheet total or the result, and applies it consistently.
Must I always file an amended tax return when correcting an error?
Only if the error affected a past year’s income-tax base. If it did and the tax should have been higher, the amended return is mandatory and must be filed by the end of the month following the month you discovered the reason. If the error has no tax effect (for example, only a reclassification between accounts), the accounting correction alone is enough.