Treasury Releases Restatement Study


FINANCIAL REPORTING

The Changing Nature and Consequences of Public Company Financial Restatements analyzed financial restatements in the years before and after the Sarbanes-Oxley Act was enacted, when the number of restatements grew from 90 in 1997 to 1,577 in 2006.

Major findings of the study, authored by Susan Scholz, an accounting professor at the University of Kansas, included:

Fraud was a factor in only 2% of 2006 restatements, down from 29% in 1997.

Revenue-related restatements decreased from 41% in 1997 to 11% in 2006.

Companies that issue restatements are typically unprofitable, with more than half reporting a net loss in the year prior to announcing the restatement.

The proportion of restatements for annual, audited financial statements (rather than quarterly, unaudited ones) increased from 50% to 70%.

The complete study is available at www.treasury.gov

Source: Treasury Department, www.treas.gov/press/releases/reports/FinancialRestatements_1997_2006.pdf .

 

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Economy and health care changes top CPAs’ list

CPA decision-makers’ economic outlook and the House Republicans’ proposed tax changes as part of replacing the Patient Protection and Affordable Care Act received attention recently. See how much you know with this short quiz.