SEC’s Top Accountant Warns of Bias Against Big Restatements

The SEC’s top accountant Wednesday questioned arguments used to justify stealth revisions to fix accounting errors, warning that companies and their auditors may be biased in making assessments to determine how to correct the mistakes.

Paul Munter, acting chief accountant at the Securities and Exchange Commission, issued written guidance describing how companies and their auditors should consider whether a financial statement error is material, requiring a full restatement of past financial results (known as a Big R), rather than an inconsequential mistake that could be fixed with a revision in future SEC filings (known as a Little R). The document ...