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New restatement data show differences across audit firms

Tammy Whitehouse | March 25, 2016

Audit committees looking to reduce their risk of restatement should probably consider engaging a Big 4 firm, but even among the Big 4 there are differences in how likely a given filing will lead to restatement.

Big 4 firms show lower rates of material restatements across capital markets compared with other firms, according the data below provided to Compliance Week by Audit Analytics based on a late January download as the firm prepares its annual restatement study. Material restatements are foretold in Item 4.02 of Form 8-K, where companies indicate they’ve found a mistake so serious investors should not rely on previously published financial statements while the company works on the restatement.

In 2015, for example, Big 4 firms were behind 44 such restatements out of 4,454 filings, for a rate of 0.99 percent...

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