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.