Financial Statement Restatement Paper

Financial Statement Restatement Paper

Deborah Robinson

University of Phoenix

ACC/537

James Neuner

December 12, 2011

Financial Statement Restatement Paper

Many organizations have faced restatements because of errors in the financial statements (Kieso, Weygandt, & Waterfield, 2007). Overstock.com is one of these companies. Overstock.com is an online retailer that offers its customers closeout and discount brand and non-brand name merchandise. This company operates as an online auctions business using their website as a marketplace for the buying and selling of the goods and services mentioned.

In February 2006, overstock.com restated financial reports from first quarter 2002 to the third quarter in 2005 due to inventory accounting errors. In October 2008, the company disclosed new customer credit and refund accounting errors and restated all financial reports from first quarter 2003 to the second quarter 2008.   However, the October 2008 restatement did not include corrections arising from under billed offsetting costs and reimbursements already earned from its fulfillment partners during the same corresponding periods, less a reasonable estimate of uncollectable amounts.

As a result on January 29,2010, Overstock.com announced they had to restate its previously issued financial statements for the fiscal year end of December 31, 2008 (including the interim periods within that fiscal year), and the quarterly periods ended March 31, 2009, June 30, 2009,  and September 30, 2009 (Antar, 2009).  

Overstock.com incorrectly amortized the expense related to restricted stock units based on the actual three-year vesting schedule rather than a three-year straight line amortization and applied an outdated forfeiture rate in calculating its expense under the plans. Correction of these errors are expected to decrease income for fiscal year 2008 by approximately $350,000, and to decrease income for the nine months ended September 30, 2009 by...