Restatements not caused by accounting rules

The number of restatements by US companies has begun to decline, according to
new research which also indicated that they may be caused more by basic errors
than complex accounting standards.

Restatements fell last year for the first time since 2001, with only 1,237
disclosed; the lowest level in three years, marking a 30% drop from the 1,801
restatements disclosed in 2006, according to a study by Audit Analytics, a US
research company.

A separate study released last month, which looked at 3,744 restatements
filed between 2003 and 2006, found that more than half were due to ‘basic
internal company errors’ that had nothing to do with the accounting standards

The new studies fly in the face of claims by the US Securities and Exchange
Commission and Treasury Department which have cited restatements as a strong
case to simplify accounting standards,
Week reported

One of the authors of last month’s study Marlene Plumlee of the University of
Utah, said: ‘In many cases, this is not about a standard being complex or
difficult to apply, they just didn’t apply it.’

Further Reading:

the Financial Week report

Related reading