Restatements. A new report says that Reserve Accounting Leading Cause of Restatements in 2003. A restatement is when a company declares that previously released financial statements contain material errors and then states how the numbers should have been reported.

Reserves and contingencies may be among the most judgmental accounts in a company's financial statements as they are subject to an estimation process. These restatements, however, do not simply reflect changes in estimates, but rather reflect flawed judgments due to the oversight or misuse of facts, fraud, or a misapplication of Generally Accepted Accounting Principals (GAAP).