What a Financial Restatement Is: Big R versus Little r
When an issuer discovers that previously issued financial statements contain material accounting errors or fraudulent misstatements, it must file Form 8-K under Item 4.02 to advise the public that those financial statements can no longer be relied upon.
- Topic: What a Financial Restatement Is: Big R versus Little r
- Category: Restatement Primer
- Summary: When an issuer discovers that previously issued financial statements contain material accounting errors or fraudulent misstatements, it must file Form 8-K under Item 4.02 to advise the public that those financial statements can no longer be relied upon.
Big R vs Little r Restatements
A 'Big R' restatement occurs when the accounting error is material to previously issued financial statements, requiring the company to withdraw and reissue prior 10-K and 10-Q reports. A 'little r' restatement corrects immaterial cumulative errors in the current period filing without a full formal Item 4.02 withdrawal.
Item 4.02 Form 8-K Disclosures
SEC Form 8-K Item 4.02 requires an issuer to disclose within four business days whether its audit committee or independent auditor has determined that prior financial statements should not be relied upon. The disclosure must detail which periods are affected and whether the auditor concurred with management's conclusions.