Rollover approach to misstatement quantification

Suppose an accrual error grows by $20,000 each year and never reverses. The current-year rollover amount may be $20,000. The four-year ending liability shortfall is $80,000. The rollover view answers the current income-statement question; it does not erase the accumulated balance error.

For a covered registrant, compute the rollover and iron-curtain views side by side. The materiality analysis then considers both quantities and the qualitative facts. Selecting the smaller one is not a policy election.

Compute the period movement

Let the beginning accumulated accrual error be $60,000 and the ending error be $80,000. The current-period rollover amount is the $20,000 increase, subject to the chosen signed convention. If $30,000 of an old error reversed while a new $20,000 error arose, the current income effect would reflect both movements.

Reconcile the result to the period's affected income-statement captions rather than using only the ending balance. Then compare it with the iron-curtain amount and preserve both in the materiality file. This method quantifies one view; it does not decide whether the error is material.