Financial Statement Restatement Paper
October 3, 2014
Professor GofterFinancial Statement Restatement Paper
Every so often companies may have to restate their financial statements to reflect changes made to the accounting in years past. Whether it be due to changes in accounting types, the changes in reporting of certain items, or egregious errors made by those in the accounting departments, it is sometimes necessary for a company to go back and restate its financial statements in order to properly reflect their companies’ performance during that fiscal year. Hartford Financial Services Group, Inc.The Hartford Financial Services Group, Inc. usually known as The Hartford, is a United States-based investment and insurance company that is part of the Fortune 500 list. In 2012, The Hartford initially posted a $350 million profit and shareholder’s equity of $22.8 billion. However, something came to the attention to The Hartford and its financial advisors that required it to revise its financial statements. The Error & Correction
In the 3rd quarter of 2012, The Hartford sold its individual life business which produced an unexpected $388 million loss, which was not properly recorded by its internal controls over financial reporting. Instead of recording the loss, the company reported that neither a gain or loss would be recorded on the transaction in accordance with generally accepted accounting principles (GAAP). The error came from the omission of reinsurance recoverable balances’ impact on the gain or loss calculations for the transaction. After the error was found, The Hartford had to go back and record the sale with the $388 million after-tax loss as required. This loss also reflected goodwill impairment and the establishment of a loss accrual for premium deficiency. Since they initially had reported a $350 million profit for the year, the net result is indeed a loss for the year of $38 million. The Effect
References: Hartford restated result wipes out 2012 profit. (2013, March). Reactions, 6 . EBSCOhost.
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