Financial Statement Restatement Paper

Topics: U.S. Securities and Exchange Commission, Generally Accepted Accounting Principles, Big Four auditors Pages: 5 (685 words) Published: December 9, 2014

Financial Statement Restatement Paper
Crystal Samuel
ACC 537
July 07, 2014
Jeffrey Collins

Financial Statement Restatement Paper
There are numerous of companies that have to restate financial statements because of an error in it., also known by its shortcut,, is an online retailer that offers a discounted brand and non-brand name merchandise at below wholesale prices. The company also developed an online auction business, which is for the buying and selling of goods and services. The effect of errors and changes on financial statements affects the stockholders and companies are put at risk of losing the trust and confidence of their financial statement users, investors, and customers. The audit report on, which were based on the management recommendation, the company came up with a condensed financial statement for the fiscal year ended in December of 2008 included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008 and the condensed interim financial statements for the periods ended March, June, and September of 2009 contained in the Company’s Quarterly Reports on Form 10-Q for the periods ended March, June, and September of 2009 each as filed with the SEC (Ritholtz, 2010). did not accurately amortized the expense related to restricted stock units based on the actual three-year investing schedule other than a three-year straight line amortization and applied a dated penalty rate in computing its expense under the procedures. The correction of these errors are expected to have a decrease in income for fiscal year 2008 by approximately $350,000, and to decrease income for the nine months ended September 30, 2009 by approximately $900,000 (Ritholtz, 2010). Operational errors, in which amounts that the company paid to partners or deducted from partner payments connected to return processing services and product costs and amounts paid to a freight vendor based on inaccurate invoices from the vendor. These two errors were not discovered for a period. After the discovering what had been exposed of these errors, the company used “gain contingency” accounting for the recovery of these amounts, which were later on, resolved an incorrect accounting treatment. The corrections of these two errors were projected to shift approximately $1.7 million of income recognized in the fiscal year 2009 back to the fiscal year 2008.            There were other miscellaneous corrections as well and also reclassifications. None of the corrections were material, either separately or cumulative. PricewaterhouseCoopers LLP, KPMG LLP, and management are currently developing a new review of these corrections and the amounts; therefore, the numbers could change. Recently, has fired Price Waterhouse Coopers as the auditing firm, which was responsible for performing the audits. Overstocked was with the auditing firm for eight years, every year there has been an unsuccessful audit report for The company intends to file an amended quarterly report on form 10-Q for the periods ended in March, June, and September of 2009, and amended results for the fiscal year of 2008 as soon as possible (Ritholtz, 2010). predicts that these restatements will have an immaterial effect on revenue and material effect on net income or loss to be reported in the consolidated financial statements. The Audit Committee has informed management to prepare an extensive review and analysis of the actual causes of the errors that were discovered. The Audit Committee also informed the management of to submit a comprehensive, thorough method for the repetition of the basic causes of the errors and for the execution of enforced rules to prevent errors to occur again in the near future (Ritholtz, 2010). The restatements for the company are projected to acknowledge all the problems that were stated in the letter on...

References: Ritholtz, Barry. " to Restate Earnings." (2010): n. pag. The Big Picture. Web.
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