While the number of restatements filed by public companies fell overall in 2012, filings by some of the largest U.S. companies – such as JPMorgan Chase and others with market capitalizations exceeding $75 million – rose for a second straight year. According to the research firm Audit Analytics, the severity of the mistakes leading to restatements and the ensuing adverse consequences diminished in 2012 with respect to each of the following criteria:
Negative impact on earnings;
Average cumulative impact on earnings per restatement;
Percentage of restatements with no effect on income statements;
Average number of days restated; and
Average number of issues identified in restatements.
Audit Analytics report available for purchase at 2012 Financial Restatements Review.
Material weaknesses related to ASC 740, Accounting for Income Taxes, are the second leading cause of disclosure in management’s annual report on Internal Controls over Financial Reporting and restatement of financial results, according to the Wall Street Journal CFO. John Monahan is available at email@example.com or 720.227.0060.