When a publicly traded company determines that it will need to amend its financial statements, it must file SEC form 8-K within four days to notify investors of non-reliance on previously issued financial statements. It will also need to file amended 10-Q forms for the affected quarters and possibly amended 10-Ks (annual forms) depending on how many accounting periods are affected by the mistakes. Not all errors require issuing a new statement, only if it is significant enough, or “material”.

The most common accounting issues that resulted in restatements occurrence were:

• Improper measurement of debt, stock warrants, and equity
• Tax expense/benefit/deferral and other (FAS 109) issues
• Cash flow statement classification errors
• Acquisitions, mergers, and reorganization accounting issues
• Revenue recognition issues
• Accounts/loans receivable, investments, and cash valuation issues
• Liabilities, payables, reserves, and accrual estimate failures