Accounting errors can have big implications for companies, and folks have data to prove it.

The Financial Times (FT) reported a “nine-year high” in the number of non-SPAC US companies calling take-backsies on their financial statements due to accounting errors. Citing data from Ideagen Audit Analytics, FT noted that 140 public companies had to reissue corrected financial statements in the first 10 months of 2024, an increase from 122 in the same period last year.

Delayed filings, whether due to errors or an industrywide talent shortage, are on the rise. As we’ve noted, research from Intelligize found 71 companies delayed filing their annual reports this year, up from 42 last year. According to the Intelligize report, “inadequate internal controls” was a common culprit in delayed filings.

Late filings can have more nefarious causes as well. One of the delays Intelligize highlighted was a notice from commodities trader Archer Daniels Midland. In the SEC filing, the company said it was “conducting an investigation of certain accounting practices and procedures” in one of its business segments. ADM corrected six years of financial statements and its CFO stepped down after the company concluded it inflated its profits in its nutrition segment, Reuters reported this spring.

For more on the rise in restatements, click here.—AZ

Audit deficiencies have been on the rise since 2020, according to inspection data from the PCAOB. To shed light on why this might be happening, the oversight board looked into the culture of six major auditing firms: the Big Four, plus BDO and Grant Thornton. The study suggested that factors like the accountant shortage and remote work might be contributing to the decline in audit quality.

Firms strained by talent shortage: PCAOB researchers interviewed 15 audit practice leaders and 141 engagement partners at the firms, starting in September 2023. Respondents at all the firms said that insufficient staff resources either contributed to deficiencies or were otherwise cause for concern. Some respondents observed that turnover was a “risk to audit quality” and worked to attract staff by improving compensation and rewards.

Respondents at all six firms stated that the accountant shortage was a problem that “needs to be widely addressed.” Some pointed to low starting salaries and the 150-hour rule as possible contributors to the shortage.

Are OG auditors better? At all firms, respondents said students and younger staff tended to view their roles as jobs rather than careers, and that they were likelier to exit the profession if they saw other, more attractive alternatives.

That’s troubling, because the PCAOB found a correlation between job tenure and audit quality. The firms with the highest percentage of respondents who started their careers there had the lowest deficiency rates; those with the smallest percentage of auditors who began their careers there had the highest deficiency rates.

Click here to keep reading about the role of culture in audit decline.—CV

While the incoming presidential administration seems rather unconcerned about the climate crisis, investors are paying close attention to weather forecasting software to insulate physical assets from weather-related damage, two recent reports showed.

JPMorgan’s Sector Spotlight on Climate Technology report noted that extreme weather events have become “an increasing concern for some business leaders and investors.” As a result, the report says that companies may use software—and hardware—to “measure, track, and adapt to the changing environment.”

Kelly Belcher, JPMorgan Commercial Banking’s head of climate tech, told Tech Brew that investor concern is directing funds into weather monitoring technology, “including specialized detection softwares and AI-enabled weather forecasting.”

“Investors are taking notice of how these innovations can help organizations assess risk, prepare for disruptions in operations, and protect our communities,” Belcher said.

Click here to keep reading Tech Brew’s story on investor concerns about climate-related disasters.—TC

IT departments face constant threats from cyberattacks and natural disasters. With effective continuity planning, you can navigate these challenges and maintain smooth business operations during IT disruptions.