Audit Analytics recently released its annual report on financial restatement trends — the report looks at trends over the last 19 years. Since 2015, total restatements — reissuance (“Big R”) and revision (“Little R”) — have declined for five consecutive years bringing the total to a 19-year low of 484 restatements in 2019. Of those, almost 80% were Little R restatements, which is the highest percentage since 2005. Here are some of the other highlights:
In addition to a decrease in overall number of restatements, Audit Analytics found an indication of low severity in every criterion quantified: (1) the negative impact on net income, (2) the average cumulative impact on net income per restatement, (3) the percentage of restatements with no impact on income statements, (4) the average number of days restated, and (5) the average number of issues identified in the restatements
– Average number of issues implicated in a restatement was approximately 1.5
– Average number of days that were corrected by a financial adjustment decreased from 500 days in 2018, to 451 in 2019 – the lowest number during the 19 years analyzed
– The largest adjustment in 2019 was $276 million and was the lowest during the last 18 years and dramatically lower than the largest adjustments in 2004 ($6.3 billion) and 2005 ($5.2 billion)
– More severe reissuance restatements from U.S. accelerated filers totaled only 32 in 2019, which is the lowest amount since 2005 when the disclosure requirement came into effect
-Lynn Jokela, TheCorporateCounsel.net August 3, 2020
