A type of accounting restatement that involves the correction of a material error to the prior period financial statements, requiring an entity to restate and reissue its previously issued financial statements to reflect the error-free, re-issued financial statements.

Material errors make the previously issued financial statements, and the related auditor’s report, unreliable (for users). Therefore, the reporting entity has to communicate that to the users of its financial statements. In the cases where the audit report, accompanying financials, for a subsequent period is due for issuance, the disclosure of error shall still be made, particularly with respect to the restatement’s effect on the financials of prior annual and interim periods.

Furthermore, the re-issuance of the restated financial statements and auditor’s report may get delayed if the determination of the restatement’s effect would linger on, i.e., take a longer period of time due to the complex nature of the errors.

The correction of error in a prior period’s financial statements through a big R restatement is also known as a “restatement” of a prior period’s financial statements. This restatement is also referred to as a big R restatement.