Companies Fixing More Errors by Revisions Than Restatements

Companies have increasingly corrected accounting mistakes through revisions as the volume of restatements plummeted over the past decade. The informal corrections allow companies to avoid the fanfare of a full restatement with the requisite press releases and SEC filings—possibly masking a broader problem for investors. One study found that almost half of revisions had an arguably material impact on a company and may have warranted a restatement.

Yet audit industry leaders argue that the steady flow of revisions is a sign that auditors are doing what they’re supposed to under the 2002 Sarbanes-Oxley Act, catching mistakes before they balloon into market-moving problems.

via Companies Fixing More Errors by Revisions Than Restatements.