Search
 

Moody's is worried that reluctant auditors are holding back on problems until the problems already go public.

While the number of material weaknesses being disclosed by companies in their Section 404 auditor and management reports has dropped dramatically over the three years ...

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

While the number of material weaknesses being disclosed by companies in their Section 404 auditor and management reports has dropped dramatically over the three years in which companies began filing, rating agency Moody’s Investors Service has uncovered a disturbing pattern–controls-related problems seem primarily to be reported after a company has already restated their financials or reported a material audit adjustment. Of the some 3,600 Moody’s corporate clients that reported in calendar year 2006, 72 disclosed material weaknesses. What Moody’s found concerning was the fact that 92% of those had already been forced to issue restatements or material audit adjustments prior to the discovery of the material weakness. “What we think is happening is a lot like a doctor telling a patient after they have had a heart attack that they also have high blood pressure,” says Gregory Jonas, one of the authors of the report. “We are not seeming to learn about material weaknesses in these reports until after there has been some reporting problem like restatements or material audit adjustments.”

Recommended Stories

GE Urged to Drop Auditor KPMG

Richard Clough |

The 110-year-long relationship is coming under increasing scrutiny from investors.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.