Dear all, kindly advice if the Suggested treatment of fraud,error e.t.c discovered which result in overstatement of cash book balance is correct:

During preparation of bank reconciliation the cash book balance is discovered to be more by say $550,000.the accountant then decides to transfer this amount to debtors saying that this where it came from which ofcourse is not the right way of treating irregularity.

Suggested correcting entries

Dr cash and bank $550,000

Cr Debtors $550,000

Being correction of fraud, errors etc wrongly taken to debtors.

Dr Equity (There are no reserves) $550,000

CR Cash and Bank $550,000

Being write off of fraud, error discovered.
Kindly advise if this treatment is correct under IAS 8. I don’t have any worked examples in my notes.