Auditor changes and restatements seem to go hand in hand, according to a new
The Public Company Accounting Oversight Board found that from 2005 to 2024, an average of 29% of companies with "Big R" restatements reported an auditor change in the year before the restatement. A Big R restatement is a restatement disclosed in a Securities and Exchange Commission Form 8-K, Item 4.02.
Comparatively, in that same period, the auditor-change rate across the broader population averaged 11%, which is 18 points lower than the auditor-changer rate of companies with major restatements.
The data also showed that after 15 years or so of decline, the number of major restatements has more than doubled in the past three years
The data was collected by the PCAOB's Office of Economic and Risk Analysis.
