restated financial statements and auditor litigation. working paper（重申了财务报表和审计诉讼。）.pdfVIP

Restated Financial Statements and Auditor Litigation Zoe-Vonna Palmrose PricewaterhouseCoopers Professor of Auditing Leventhal School of Accounting University of Southern California Susan Scholz Baird, Kurtz and Dobson Faculty Scholar University of Kansas Draft: October, 2000 The helpful comments of Michael Ettredge, Linda McDaniel, Kevin Raedy, Brian Roundtree, and Michelle Yetman and of workshop participants at the University of Kansas, Indiana University, and the University of North Carolina, the research assistance of Michael James and Michael Kennington, and the financial assistance of the PricewaterhouseCoopers Foundation and Baird, Kurtz and Dobson are gratefully acknowledged. Also, we have benefited from discussions with George Fritz, Guy Moore, Randy Noonan, Dave Pearson, and Tom Stemlar. Restated Financial Statements and Auditor Litigation Abstract: This study provides evidence on the restatement circumstances associated with lawsuits against auditors. We examine restatements of financial statements previously issued to the public and filed with the SEC by 416 US companies that announced restatements from 1995 to mid- 1999. Our examination focuses on the accounting issues giving rise to restatements. We classify these issues as either economic or technical. Economic restatements involve transactions and accounts related to core (recurring) earnings; all other restatements are technical. We find that auditors are significantly more likely to be sued over economic restatements than technical ones. Additionally, we find that revenue restatements, one type of economic restatement and overall the most frequent, primarily contribute to this result. While eco