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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.
Then there was this troubling bit from Macy’s. The department store operator recently had to delay its full Q3 report after discovering an accounting employee intentionally hid as much as $154 million in delivery expenses going all the way back to Q4 2021.
Sandy Peters, senior head of global advocacy at the CFA Institute, told FT that restatements “tell you something about company management, and about a company’s internal controls.”