Financial Statement and Audit Quality

Here is some information about the quality of financial statements submitted to the U.S. Securities and Exchange Commission (SEC) and the audits of those financial statements:

  1. Per the PCAOB (October 2025), between 2005 and 2024; Big R financial restatements (restatement of material errors) occurred at a rate of around 3% per year. That is an average quality level of 97% which is a sigma level of between 3 and 4.
  2. Per the PCAOB (April 2024), for 2024 audit engagements of the top six global networks of audit firms (PWC, EY, Deloitte, KPMG, BDO, and Grant Thornton); there was one or more deficiencies discovered per PCAOB inspection engagements for 26% of the inspection engagements for those top six global networks of audit firms.
  3. Audit Analytics performed an analysis of restatements over a 21 year period. Financial restatements are a significant measure of financial reporting quality. This chart provides an overview or restatements between 2002 and 2021:

Additional Information:

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