Restatements, revisions and amended filings (10-K/A)

Every 10-K and 10-Q shows comparative figures for earlier periods. Those comparatives are not always the numbers originally reported. ASC 250 distinguishes three reasons they can differ: a change in accounting principle, a change in accounting estimate, and the correction of an error.

A change in accounting principle is generally applied retrospectively, so prior periods are recast as if the new principle had always applied (ASC 250-10-45-5). A change in estimate — a new useful life for equipment, for example — is applied to the current and future periods only, so past figures do not change (ASC 250-10-45-17). Error corrections are covered below.

Other standards also recast prior periods without any error: results of discontinued operations are reclassified out of continuing operations for all periods shown (ASC 205-20), and segment information for earlier periods is generally recast when a company changes its reportable segments (ASC 280).

When an error in previously issued financial statements is found, ASC 250-10-45-23 requires it to be corrected by restating the prior-period statements. Practice uses two informal labels. A "Big R" restatement corrects an error material to the prior statements: they are reissued, usually in an amended filing, and the company files a Form 8-K under Item 4.02 saying the earlier statements should no longer be relied on. A "little r" revision corrects an error that was not material to the prior periods but would be material if corrected in the current period; the prior periods are corrected the next time they appear as comparatives.

Since the SEC's 2022 clawback rule, the 10-K cover page has two check boxes: whether the financial statements reflect the correction of an error in previously issued statements, and whether any such correction is a restatement that required a recovery analysis of executive incentive pay under Exchange Act Rule 10D-1.

An amended report carries the suffix /A and, under Exchange Act Rule 12b-15, must set out the complete text of each item it amends. Many amendments have nothing to do with the numbers. A common 10-K/A adds the Part III information — directors, executive compensation, ownership — when the proxy statement will not be filed within 120 days of the fiscal year end. Others fix an exhibit, an auditor's report date or the XBRL.

So the presence of a 10-K/A is not by itself a sign of a restatement. The explanatory note at the start of the amendment says what changed, and an Item 4.02 8-K is the clearer signal that previously reported financial statements were wrong.

A given quarter or year usually appears in several filings: the original report and later reports that show it as a comparative. When those filings report different values for the same figure and period, Aerarium first picks the XBRL concept for the figure from a fixed priority list, then uses the most recent filing's value for that concept, so restated and recast comparatives usually replace the original numbers. A later filing that reports the figure only under a lower-priority concept does not. A guard rejects a later value that differs from earlier filings by a factor of about 1,000, which is a scaling mistake rather than a restatement.

Because companies do not always re-tag every line when they recast, a long history can mix periods on the old and new basis. When a series jumps at the point where a company changed its accounting or its segments, the filing's own notes on the change are the place to confirm it.