DEFINITION of 'Restatement'

The revision and publication of one or more of a company's previous financial statements. A restatement is necessary when it is determined that a previous statement contains a material inaccuracy. The need to restate financial figures can result from accounting errors, noncompliance with generally accepted accounting principles, fraud, misrepresentation or a simple clerical error. A negative restatement often shakes investors' confidence and causes the stock's price to decline.

BREAKING DOWN 'Restatement'

When a publicly traded company determines that it will need to amend its financial statements, it must file SEC form 8-K within four days to notify investors of non-reliance on previously issued financial statements. It will also need to file amended 10-Q forms for the affected quarters and possibly amended 10-Ks (annual forms) depending on how many accounting periods are affected by the mistakes. Not all errors require issuing a new statement, only if it is significant enough, or "material".

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