In the US financial market, "originally reported" and "restated" financials describe two different sets of financial information that a company shares about its performance. Understanding these terms is crucial for investors, analysts, and other stakeholders who rely on financial statements to make informed decisions.
Originally Reported Financials
"Originally reported" financials are the initial statements released by a company for a specific period, such as a quarter or a year. These include balance sheet, income statement, statement of cash flows, and statement of shareholders' equity, among other disclosures. They adhere to generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the jurisdiction. They represent the company's financial position and performance as initially recorded and presented to the public and regulatory bodies.
Restated Financials
"Restated" financials, on the other hand, are revised versions of previously issued financial statements. Companies may restate their financials for various reasons, including:
Errors and Misstatements: When significant errors or misstatements not identified during the initial reporting are discovered.
Changes in Accounting Principles: When new accounting standards or policies are adopted, necessitating retroactive adjustments to make past results comparable.
Regulatory Requirements: When adjustments are required to comply with the findings or directives of regulatory bodies.
Fraud or Misconduct: When financial statements are affected by fraud or misconduct.
The purpose of restating financials is to provide a more accurate and fair view of the company's financial position and performance for the affected periods. Restated financials replace the original figures.
Impact
The difference between originally reported and restated financials can impact how investors and analysts perceive a company's health and future prospects. It often leads to increased scrutiny and can affect investor confidence, stock prices and the company's reputation. But transparent and timely restatements can also demonstrate the company's commitment to accurate financial reporting and governance.