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January 31, 2023

Financial Restatements On the Decline—Again

Auditor

There has been a trend in recent years of financial restatements for public companies decreasing, and 2017 was no exception.

A new report by Audit Analytics revealed that the total number of restatements fell for the fifth consecutive year—from 873 in 2013 to 553 in 2017, according to Tammy Whitehouse of Compliance Week.

She also examined the data regarding reissuance restatements and revision restatements:

Reissuance restatements—those that are serious enough to necessitate withdrawing prior financial statements and issuing them anew—fell to 109 in 2017. That number was down from 128 in 2016 and 152 in 2015. The number has fallen steadily every year for the past 10 years, according to the report.

Revision restatements—those in which companies corrected mistakes without withdrawing reliance on prior financials—fell to 370 in 2017, down from 467 in 2016 and 522 in 2015. That type of restatement crept upward for a few years from 2009 to 2014, but then tapered over three consecutive years.

Whitehouse also noted that more than half of restatements (54%) had no effect on net income, which is down from 59% in 2016.

In addition, there’s been an improvement in the quality of financial reporting among accelerated filers. Whitehouse wrote that after steady restatement increases among accelerated filers from 2011 to 2014, when they reached a high of 351, the numbers have since dropped to a total of 184 in 2017.

[CW]

Image: iStock/stevanovicigor

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