July 29, 2014

CAQ Snapshot: July 2014

I. New CAQ-Commissioned Research Shows Substantial Decline in Financial Restatements

The Center for Audit Quality (CAQ) has published a new research report, Financial Restatement Trends in the United States: 2003–2012. This study, commissioned by the CAQ and authored by Professor Susan Scholz of the University of Kansas, focuses on the decade following the implementation of the Sarbanes-Oxley Act of 2002. It examines developments in the number and seriousness of restatements over this period and chronicles key policy changes that may have had an impact on restatements.

Among the report's key findings:

  • The number of restatements has declined significantly since its peak in 2006, while the number of accounting issues underlying each restatement reported has also decreased.
  • The percentage of restatements that involve revenue reporting has leveled off to roughly 10 percent of restatement volume for the last several years.
  • Reissuance restatements—meaning those reported in Item 4.02 of a Form 8-K— have decreased in both number and as a percentage of all restatements over the eight years since the SEC required issuers to report reissuance restatements on the Form 8-K.

Number of Restatements Announced Per Year


Source: Financial Restatement Trends in the United States: 2003–2012

“As the paper capably summarizes, policy developments—such as new laws, regulations, and auditing standards—have played a role in these positive trends,” said CAQ Executive Director Cindy Fornelli in a statement accompanying the report's publication. “This is an encouraging development for all market participants, especially the investors who play such a critical role in the effective functioning of our capital markets.”

For more from Fornelli on this topic, see her July 24 LinkedIn Influencer post, "Measuring Improvements in Financial Reporting."

II. Strong Turnout for Anti-Fraud Collaboration Webcast on Whistleblowing

More than 1,700 viewers watched the Anti- Fraud Collaboration's July 1 webcast, "How to Improve Your Whistleblower Program and Address Impediments to Reporting." Moderated by the CAQ's Fornelli, the webcast featured Patricia Harned, President of the Ethics Resource Center; Kristin Rivera, Partner of Forensic Services at PwC; and Janice Innis-Thompson, Senior Managing Director, Chief Compliance and Ethics Officer at TIAA-CREF. These panelists provided best practices from leading organizations and actionable recommendations that all companies can use to retool their existing whistleblower programs.

The webcast has been posted at the CAQ's YouTube channel. Visit AntiFraudCollaboration.org for the latest information on Collaboration events and research.

III. New Staff Additions at the CAQ

The CAQ has bolstered its staff recently, including new hires with deep accounting expertise.

Luba Dinits joined the CAQ as Director of Professional Practice in June. Previously, Dinits served as the Director of External Reporting for Marriott International. From 2005–2008, she was the Controller of Healthcare Financial Services in GE’s Commercial Finance group and has also held financial roles at McCormick & Company, UBS, Lehman Brothers, and Arthur Andersen. A Certified Public Accountant (CPA), Dinits obtained her BA in Accounting from Towson University and her MBA from NYU’s Stern School of Business.

Earlier in June, Casey Watson started as Technical Manager in the CAQ's Professional Practice group. Prior to joining the CAQ, she worked as a Senior Associate in Forensic Services at PricewaterhouseCoopers LLP, an Internal Auditor with National Geographic Society, and a Senior Auditor with Deloitte LLP. Watson, also a CPA, holds a BS in Accounting from the University of Central Florida.

In February, the CAQ added Cherissa Cruz as CAQ Receptionist. A graduate of Marymount University, Cruz came to the CAQ with experience in retail management, guest services, and office administration.

IV. CAQ Publication Highlights Resources for Academics

Professors across the country have found CAQ resources useful for teaching and research. A newly updated CAQ publication provides a summary of the CAQ's informational materials, including publications, profession comment letters on public policy and standards setting, case studies with teaching guides on technical issues, surveys, and educational videos and webcasts. It also offers tips to academics interested in those offerings to meet curricula and classroom needs.

The brochure can be found on the CAQ website, and print copies are available on request.