More than two years after the Securities and Exchange Commission published advice on how to correct errors in financial statements, questions still abound, says John May, a partner at PricewaterhouseCoopers.
SEC staff published Staff Accounting Bulletin No. 108 in 2006 to change the way companies viewed and acted on immaterial errors left lingering in prior period financial statements. Before SAB 108, it was customary for companies to use either the “rollover” method to fix mistakes in the income statement or the “iron curtain” method to correct problems in the balance sheet. SAB 108 instructed companies to use both methods.
