Financial remediation and restatement

Mitigating the risk of a remediation and restatement: A proactive approach to potential issues

During the second quarter of 2021, something unusual happened. More companies issued restatements than the previous year—or any year since 2013. What are the reasons behind the rise in restatements and what can companies do to avert these types of incidents?

Companies must be aware of a growing volume of conditions that can affect business performance, including:

• Changing economic environment
• Digital transformation
• New standards and regulations
• Nonrecurring transactions
• Employee turnover

Read part one of our series to dive deeper into the drivers leading to remediation and restatement activities. And learn how your company can establish a framework to get ahead of restatement risk—one that’s based on people, process, and technology.

Remediation and restatement: Responding to financial reporting issues with purpose

Poll results from a recent Deloitte webcast indicate that companies will likely confront a remediation event at some point. Some of the accounting and financial reporting issues that are often present when the need for remediation arises include:

• Misapplication of complex accounting rules such as those for acquisitions and divestures, investments, revenue recognition, and income taxes
• Revenue recognition errors
• Misclassifications in the income statement and balance sheet, or related to misclassification of cash flows
• Areas involving estimates and valuation
• Equity transactions

If this type of issue arises, what can companies do to emerge successfully?
Read the second part of our series for key action steps you can take to reach a resolution quickly—and head off potential remediation events in the future.