Financial restatements by US companies due to accounting errors have reached a nine-year high, leading to questions about the capabilities of auditors to detect mistakes, as reported by the Financial Times' Stephen Foley.
Through October, 140 companies withdrew unreliable financial statements and reissued them with corrected numbers. Over the same period in 2023, only 123 companies did so. This represents a rise in the number of serious accounting errors, as such restatements are typically only done when an issue is significant or of particular concern to investors.
"Restatements tell you something about company management, and about a company's internal controls," said Sandy Peters, Head of Global Advocacy at the CFA Institute. Peters called the rise in statements “concerning.”
Among US auditors, EY had the most clients forced to reissue their financial statements, representing 26 cases. Notably, EY was also identified by the Public Company Accounting Oversight Board as the auditor with the highest rate of deficiencies found in its inspection activities.
Last year, Starling Insights published "Renal Failure: A Crisis in Audit Culture?," a Deeper Dive discussing the recent rash of scandals in the audit profession and how it impacts society at large.
Join The Discussion