Thursday, April 10, 2008

How Long Should It Take to Restate?

Sometimes after announcing they need to restate their financials, companies go into shutdown mode. For up to two years, investors won't see a regulatory filing or hear a significant financial peep while a company tidies up its past.

The Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting (CIFR) hopes to reduce the frequency of these so-called dark periods. During a panel held by the Center for Audit Quality (CAQ) on Tuesday, CIFR chairman Robert Pozen suggested that some of these restatements could be resolved more easily through an 8-K filing that corrects an error but spares the company from having to go through all of its old financials with a jeweler's loupe.

How Long Should It Take to Restate?

Labels: 8-k, CIFR, restatement, sec

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Sunday, March 16, 2008

Proposed Restatement Guidelines Draw Investor Alarm

Investor advocates are wary of a regulatory proposal that could decrease the number of times companies restate their financial results.

Barbara Roper, director of investor protection for the Consumer Federation of America, contends that the suggested changes to the Securities and Exchange Commission's nearly 10-year-old materiality guidance — which companies rely on to calculate an error's effect on financial statements — will likely reduce transparency and encourage "shoddy practices" by unscrupulous companies.

Proposed Restatement Guidelines Draw Investor Alarm

Labels: restatement, SEC (Securities and Exchange Commission)

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Tuesday, January 15, 2008

The SarBox: The bill for restatements can be costly

Do financial restatements mean anything these days? The Securities and Exchange Commission Advisory Committee on Financial Reporting is looking into the huge increase in financial restatements by public companies since Sarbanes-Oxley was passed in 2002—a review triggered, at least in part, by SarbOx critics who contend that restatements are expensive, time consuming and of questionable value to shareholders, who increasingly ignore them. The first academic study examining how such restatements affect companies’ ability to secure bank loans, however, suggests that lenders find the information important. In fact, the authors of the report found that businesses that reported financial gaffes—whether intentional or not—ended up paying substantially higher interest rates on loans. The research also revealed that restatements led to stricter terms for borrowers.

The study, conducted by Professors John Graham of Duke University, Si Li of Wilfred Laurier University and Jiaping Qiu of McMaster University, looked at data from a U.S. Government Accountability Office (GAO) database of 919 restatements announced by 800 public companies between Jan. 1, 1997 and June 30, 2002. The professors then combed through a database maintained by Loan Pricing Corp., which collects information on commercial loans made to both U.S. and foreign corporations.

The SarBox: The bill for restatements can be costly

Labels: lending, restatement, sarbox

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