Misstatement of fact
A misstatement is the difference between the required amount, classification, presentation, or disclosure of a financial statement line item and what is reported to achieve a fair presentation, as per the applicable accounting framework.
Misstatement of Fact. In the event of a change in the amount payable under a Reinsured Policy due to an applicant’s or policy owner’s misstatement on the application for the Reinsured Policy, Reinsurer’s liability concerning such Reinsured Policy will change proportionately to the change in the amount payable under the Reinsured Policy. Suppose the Ceding Company has misstated facts otherwise correct on the application, which results in the incorrect amount of premium being collected. In that case, the Ceding Company will reimburse the Reinsurer for the correct premium amount. Should this misstatement result in the over-collection of premium, the Ceding Company will work with the Reinsurer to refund the excess premium to the policy owner. Suppose the Ceding Company’s liability under any Reinsured Policy is changed because of a misstatement of age or sex. In that case, the Reinsurer’s liability concerning such Reinsured Policy and benefits under the Reinsured Policies will be adjusted proportionately based on the appropriate facts[Law Insider]. Also, Synonyms can be noun distortion, exaggeration, fabrication, false coloring, false statement, falsification, garbled version, misconstruction, misinformation, misinterpretation, misrepresentation, misstatement, perversion, and untruth [Academic Dictionaries and Encyclopedias]. An error could have caused a misstatement in recording a transaction or fraudulent activity. It is considered material when the user of a set of financial statements alters his economic decisions because of the misstatement. Auditors assess the level of material misstatement when developing an audit plan for a client. When a claim is brought that a business has issued fraudulent financial statements, a common defense is for the organization to claim that a misstatement occurred, which by definition is non-intentional and, therefore, nonfraudulent [AccountingTools]. A misstatement occurs when something needs to be treated correctly in the financial statements, meaning that the applicable financial reporting framework, namely IFRS, needs to be applied appropriately. Examples of misstatement, which can arise due to error or fraud, could include: An incorrect amount has been recognized. For example, an asset is not valued by the relevant IFRS requirement. An item is classified incorrectly – for example, the finance cost is included within the cost of sales in the statement of profit or loss. Presentation is inappropriate – for example, the results of discontinued operations are not separately presented. Disclosure is not correct or misleading disclosure has been included as a result of management bias. For example, a contingent liability disclosure is missing or inadequately described in the notes to the financial statements[ACCA Global].
Misstatement of Fact Sample Clauses. Law Insider. Retrieved from: https://www.lawinsider.com/clause/misstatement-of-fact
Misstatement of fact. Academic Dictionaries and Encyclopedias. Retrieved from: https://law.en-academic.com/45360/misstatement_of_fact
Evaluation of misstatements. ACCA Global. Retrieved from https://www.accaglobal.com/us/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/misstatements.html
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