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.