Upfront: A Jump in Restatements

The upward trend in accounting errors continued in 2004.

The number of financial restatements filed by public companies to correct accounting errors increased by 28 percent to 414 in 2004, according to Huron Consulting Group's 2004 Annual Review of Financial Reporting Matters, an analysis of amended SEC filings. The three leading causes of restatements were errors in revenue recognition, equity accounting, and treatment of reserves, accruals and contingencies.

"After the leveling off in restatement filings observed in 2003, we had hoped that the upward trend in accounting errors might be over," said Joseph J. Floyd, New York City-based managing director and national practice leader of Huron's disputes and investigations practice. "It seems that the scrutiny placed on company internal controls and other pressures surfaced a large number of reporting problems this past year."