BusinessCompany NewsRestatements not caused by accounting rules

Restatements not caused by accounting rules

US companies cannot blame complexity of accounting rules for restatements, new studies show.

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
themselves.

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,
Financial
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:

Read
the Financial Week report

Related Articles

BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

4w Emma Smith, Managing Editor
CVR Global appoints partner in London office

Company News CVR Global appoints partner in London office

5m Alia Shoaib, Reporter
FTSE100 failing to provide adequate ethics information

Company News FTSE100 failing to provide adequate ethics information

5m Alia Shoaib, Reporter
Brand strength leads to fee income growth for RSM

Accounting Firms Brand strength leads to fee income growth for RSM

8m Emma Smith, Managing Editor
Mazars strengthens audit team with partner appointment

Accounting Firms Mazars strengthens audit team with partner appointment

8m Emma Smith, Managing Editor
Moore Stephens recruits new private client partner

Accounting Firms Moore Stephens recruits new private client partner

8m Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

8m Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

8m Emma Smith, Managing Editor