2019 Financial Restatements Review

The annual Audit Analytics report on financial restatement trends is now available. This report provides a detailed analysis and comparison of trends in financial restatements over a nineteen-year period.

When looking at restatements, we categorize them by two levels: reissuance restatements and revision restatements. Reissuance restatements, sometimes referred to as “Big R” restatements, address a material error that calls for the reissuance of a past financial statement.

Alternatively, revision restatements, or “little r” restatements, deal with immaterial misstatements, or adjustments made in the normal course of business. Because revision restatements are less severe, they are generally not looked at as a sign of poor reporting. However, some would argue that the disclosure of revision restatements shows a level of transparency and honesty by the filer.

Some key highlights from this year’s report include:

  • The total of 484 restatements in 2019 is the lowest amount during the nineteen years analyzed;
  • Revision restatements totaled roughly 80% of all restatements in 2019;
  • In 2019, 57% of restatements had no impact on income statements;
  • There were 32 reissuance restatements filed in 2019 with an 8-K, Item 4.02 disclosure;
  • The average number of days restated dropped for the third consecutive year, averaging around 451 days in 2019;
  • The average number of issues per restatement dropped for the second year in a row, averaging around 1.5 issues per restatement in 2019.

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For more information on this analysis, please contact us.

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