Financial Restatements: Audit Issues and Reasons for Change 1995—2020

• In Event: Student Track: Accounting Issues

Abstract

This paper examines restatement data gathered from Audit Analytics and highlights major spikes and peaks that occurred between 1995 and 2020. The research initially examines the overall trend of restatements which indicates that a single major spike and peak occurred in 2005 and 2006, respectively. Deeper examination reveals that numerous spikes and peaks, associated with four broad categories of audit issues, are concealed beneath the overall trend. Per each category of audit issue, industry culprits are determined, and consistent financial restatement issues across all industry culprits are identified. General assertions are then made to determine the specific causes of restatements for the major spikes and peaks associated with each category of audit issues. The final conclusion predicts that the current pandemic-climate caused by COVID-19 will lead to a surge in restatements as businesses deal with the unforeseen global economic contraction.

Author

• David K. Shamburger, The University of Texas at Tyler