## Disclosure of Prior Period Items — Banks

### The Problem

The format of the Profit and Loss Account for banks is prescribed in Form B under the Third Schedule to the Banking Regulation Act, 1949. This format does not specifically provide a line item for the impact of prior period items on the current year's profit and loss.

### The Solution

Where prior period items are material and disclosure is warranted, the auditor should ensure such disclosures are given — even though the prescribed format does not explicitly require a separate line. The disclosure may be provided as a note to the accounts.

### Why This Matters

AS 5 (Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies) requires disclosure of prior period items with their nature and amount. The bank format's silence does not override AS 5 requirements — both must be complied with harmoniously.

⚠️ Common exam mistakes

Assuming that because Form B does not have a dedicated line for prior period items, no disclosure is needed — AS 5 disclosure requirements still apply.
Disclosing prior period items only in the notes without quantifying their impact on current year's profit — the amount must be stated clearly.

Bare-Act text Third Schedule, Form B · Banking Regulation Act, 1949 · click to expand

The format of the profit and loss accounts of banks prescribed in Form B under Third Schedule to the Banking Regulation Act, 1949 does not specifically provide for disclosure of the impact of prior period items on the current year's profit and loss; such disclosures, wherever warranted, may be given.

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Disclosure of Prior Period Items in Bank Financial Statements

⚠️ Common exam mistakes