2021 Financial Restatements Review

Audit Analytics released its annual Financial Restatements report this week. This report examines the trends and statistics of financial restatements filed with the Securities and Exchange Commission since 2002.

Using data from the Audit Analytics Restatements database, the report takes a close look at developments in restatement trends. Additionally, the report provides a deep discussion of the role and effect special purpose acquisition companies (SPACs) had on overall trends. 

SPACs dramatically affected the overall market. This is clear when looking at the overall number of restatements.

Financial Restatements: 2002 - 2021

The total number of restatements increased by 289% during 2021, but when controlling for SPACs, restatements decreased by 10%. Analyzing the overall restatement market, SPACs composed over 3/4 of all restatements.

2021 Restatement Composition

The dramatic increase in SPAC-centered restatements and percentage of restatements in the overall market was primarily in response to the joint statement issued by the SEC’s John Coates, Acting Director of Corporation Finance and Acting Chief Account Paul Munter that urged SPACs to reconsider the accounting treatment of redeemable shares and warrant liabilities.

Financial Restatements: A Twenty-One-Year Review provides a deep discussion recent trends in financial restatements. In this report, we analyze restatement trends by restatement type, materiality, and income impact. Additionally, we provide an in-depth discussion of these trends with and without SPAC-centered restatements.  

To access the full report, click here. Audit Analytics subscribers can download the report from their dashboard.

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