Qnt 537 Financial Restatement Paper

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| Financial Restatement | Accountant 537 | | Jocelyn Olivares | 2/19/2012 | Instructor: Corrine Hasbany | After the release of the statements, errors can be found by the company, company’s internal auditors or external auditors. If the error is deemed to be material to the financial statements, those statements are required to be corrected and re-issued to users. Materiality relates to a financial statements item’s impact on a company’s overall financial condition and operations (Kimmel, Weygandt, & Kieso, 2007, P 69). Materiality is determined by whether the error would cause users to come to inaccurate conclusions in their analysis. Immaterial would be something that is too insignificant to impact the…show more content…
The restatement results from the lack of payments received by certain Chinese customers for shipments already accounted for (Savitz, 2011). Previously, AMSC recognized revenues once customers received shipments not once payment was received. In the case of Chinese customer Sinovel Wind Group, AMSC stated that they should have used the cash-based method of accounting for shipments after September 30, 2010 (Fredette, 2011). This improper recognition of revenue by AMSC will negatively affect previously reported earnings. The adjustments for 2010, 3rd quarter earnings will reduce to $98 million, down from $101.5 million, and 4th quarter will be reduced to $43 million from $114.2 million (Savitz, 2011). AMSC also stated that cash and equivalents were at $240 million quarter end, down from $260.5 million on quarter earlier (Savitz, 2011). Sinovel has no intentions of paying AMSC. This is AMSC biggest client because this client contributes to 80% of its revenues. Not good news for investors or anyone with interest in
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