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Recently, a Bloomberg blogger highlighted the apparent scarcity of accounting scandals in the wake of the financial-industry meltdown.
Recently, a Bloomberg blogger highlighted the apparent scarcity of accounting scandals in the wake of the financial-industry meltdown.
In 2010, only one S&P 500 company voluntarily disclosed its own accounting error. Here are some other
statistics:
- In 2010, 699 companies registered with the SEC revised their financial statements, more than the 640 that did in 2009-but fewer than half the number for 2006, which was 1,566.
- In 2010, 44 banks issued revised statements; the figure for 2009 was 45. Between 2008 and the end of 2010, 133 banks made corrections. In the three-year interval before the financial crisis, 169 banks issued revised statements.
How did such discrepancies happen? The enactment of the Sarbanes-Oxley Act in 2002 may account for
the record numbers of restatements by 2006, but why did the numbers fall so steeply in later years? In
August 2008, the SEC decided to ease the standards for deciding when restatements were called for.
Although companies have apparently improved their internal accounting practices, some observers find
it hard to explain why so few banks have issued restatements in the years following the crisis.
What about you guys? Why do you think so few banks have issued restatements in the years following the crisis?
