the deterrence and detection of restatements
or frauds) has been affected by trends in restatement
and fraud from 2000 to 2014.
Our results provide evidence that the likelihood of CEO or CFO turnover significantly increases for companies with higher restatement
The report notes that increased restatements
beginning in 2003 could be attributed to the implementation of internal control reporting under Sarbanes-Oxley Section 404.
Revenue "mis-recognition" is the leading cause of restatements
, with 1,295 restatements
in 2005, almost twice the number in 2004, reports Glass, Lewis & Co.
Another general principle of the restatement
rule requires that a suing party justifiably rely on the information or work product the accountant provided.
The first was that restatements
grew nearly 18-fold, from 90 in 1997 to 1,577 in 2006, with an acceleration in restatement
activity occurring in 2001 before the implementation of SOX.
For instance, how many of the 1,295 restatements
indicate fraud or intentional deception, vs.
Misconceptions regarding these changes, especially about who the restatement
requirements apply to, are many, Dodsworth says.
The court analyzed the plaintiff's state law claim against the firm under Restatement
(second) of Torts section 552 as well.
Thus, the percentage of stealth restatements
that deal with core accounts is not any higher than the total restatement