Completing Complex Option Restatement Project for S&P 500 Technology Company

Financial Intelligence was engaged by an S&P 500 technology company to assist management with their option restatement. Since the company had changed auditors within the fiscal years included in the current Form 10-K, audit teams from two different Big Four firms were involved in the project.

An investigation by the company’s Board of Directors had concluded that there had been extensive option backdating in prior fiscal years. Additionally, forensic accountants and attorneys had reviewed over 40,000 historical grants and had also found widespread instances of creative modification events, many of which had also been backdated.

Financial Intelligence formed a project team that included several of its Managing Directors, one of whom also served as the leader of the project. Our engagement included the following services:

  • Assist the forensics team with data analysis necessary for their work
  • Analyze the forensics results to determine proper accounting under US GAAP for backdating and all other issues
    • Required thorough knowledge of all accounting literature in effect between 1994 and 2008
  • Prepare memos to substantiate the proper accounting and describe resultant calculations
  • Work with both audit teams to drive consensus on all accounting methodologies
  • Build custom models to complete all calculations
  • Prepare accounting and tax analyses for all years based on calculations
  • Assist in the preparation of all financial statement disclosures
  • Calculate all fair value assumptions using the “corrected” data
  • Prepare final accounting white papers documenting all of the project work and calculations
  • Provide audit support to both audit teams
  • Transition all restatement impacts into the company’s future quarterly close processes

At the conclusion of the project, Financial Intelligence was recognized by management, its Board of Directors and both of the Big Four audit partners for its expert work on the project.