Legal Definitions - financial restatement

A financial restatement is a report that corrects material errors in a company's financial statement. This is done to adjust profits and losses after an accounting procedure has been disallowed.

For example, if a company accidentally recorded a sale twice in their financial statement, they would need to issue a financial restatement to correct the error and adjust their profits accordingly. Another example could be if a company realized they had been using an incorrect accounting method, they would need to issue a financial restatement to correct the error and adjust their profits and losses.

Financial restatements are important because they ensure that a company's financial statements are accurate and reliable. They also help investors and stakeholders make informed decisions based on the company's financial performance.