The correct answers are:

• The discovery of a significant fraud in an overseas subsidiary resulting in a write-down in the valuation of its assets. The perpetrators have confessed to the fraud which goes back at least 5 years.

• The company has material underprovision for corporation tax arising from the use of incorrect data by the tax advisors acting for the company.

Decrease in the opening value of inventory would be considered to be a change of accounting estimate, so no prior period adjustment would be required.

Discovery of significant fraud would be classed as a material error, if it is of such significance that previous years financial statements are not reliable. Therefore, prior period adjustment is necessary.

Similarly, the wrong tax charge would also be a material error, if it was based on incorrect information.

The change in method of calculating irrecoverable debt provision would be a change in accounting estimate. It would not therefore be necessary to change prior period.