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.
‘Enforcement 40’ for 2020
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