On June 30, 2002, President Bush signed the Sarbanes-Oxley Act into law (for a trip down memory lane, you can read Broc Romanek's post reporting that momentous event here). Less than a month later, Governor Gray Davis signed AB 270 (Correa) into law. AB 270, one of several California laws enacted in the wake of the financial crises in 2001-2002, focused on improving oversight of the accounting industry by the California Board of Accountancy.
Among many other structural and regulatory changes, AB 270 imposed a requirement on licensees to report any restatement of earnings by an audit client. Cal. Bus. & Prof. Code § 5063(b)(1). The Board of Accountancy subsequently adopted an implementing regulation, 16 CCR § 59.
Since a number of years have gone by since AB 270 took effect, I asked the Board for the number of restatements reported to it. Based on the data provided to me, I created the graph below. Note that these data are presented on a state fiscal, not calendar, year basis (i.e., July 1 to June 30). Also, § 5063(b)(1) and Rule 59 require reports with respect to the following three categories of clients:
Note that the triggers for reporting vary based on type of client. For example, a restatement with respect to a charitable organization is required when the restatement is issued for purposes of correcting any error in a previously issued financial statement and that has resulted in the filing of an amended or superceding Internal Revenue Service Form 990 or 990PF.