financial restatement

A material adjustment to a corporate financial statement that affects the cumulative results of operations during past years. Most often, a financial restatement takes the form of a revision to a corporation's past operating results when they are significantly less favorable than was originally noted. In recent years, a number of major public corporations have issued restatements, which have, in turn, prompted major sell-offs of the organizations' shares of stock. This ultimately has resulted in claims against the firms' directors and officers, alleging fraud and mismanagement. Such claims are covered by directors and officers (D&O) liability insurance policies.