A new study by Huron Consulting Group has found that, after a slight drop in 2003, the number of restatements due to errors in the annual and interim financial statements of public companies filed with the US Securities and Exchange Commission rose to a record 414 in 2004, up from 323 in 2002 and 330 in 2002.
The most common errors in 2004 related to:
- Revenue recognition (16% of 2004 errors).
- Equity, including EPS and stock options (16%).
- Provisions (accruals for liabilities of uncertain amount or timing) and contingencies (14%).
- Improper capitalisation of assets (8%).
- Inventories (4%).
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