NOT ENOUGH TIME PLAYED IN FIRST HALF

Question:
This situation occurred in an Over 30 match involving my club. The referee blew the halftime whistle at 38 minutes, according to my watch. When my captain asked the referee about the shortened half, the referee insisted that it had been 45 minutes. OK, that’s that, you can’t win an argument like that, so you move on. When the teams were ready to take the field to begin the second half, the referee announced that he had inadvertently shortened the first half by five minutes. He said that he would make up the lost time as follows:

1.He instructed the teams to set up for a kickoff as they did to start the match.

2.They would play five minutes.

3.He would blow the whistle at five minutes and the teams would change ends and play 45 minutes in the second half.

Everyone involved was confused, but nobody knew enough to dispute his remedy. None of this sounds like the correct protocol for this situation. Any help would be appreciated.

USSF answer (August 3, 2011):
According to the Laws of the Game, the referee must not compensate for a timekeeping error during the first half by increasing or reducing the length of the second half. So far, so good. Unfortunately, your referee handled the situation incorrectly. The amount of time remaining the first half should have been played, as the referee finally came to realize, but the correct restart would have been for the reason the ball was out of play when the referee stopped the game short. If the ball was off the field, then the game should have been restarted for the reason the ball had left the field. If it was in play, then the correct restart would be a dropped ball at the place where it was when the referee stopped play. If any time is lost during the remaining amount of time, then the referee must also add that time.