FYI: Correction of a Material Misstatement in Previously Issued Financial Statements When the financial statements are restated to correct a prior material misstatement—The auditor should include an emphasis-of-matter paragraph in the auditor's report. (That paragraph need not be included in subsequent periods.)

1. If the financial statement disclosures relating to the restatement are not adequate—The auditor should evaluate the inadequacy of disclosure and consider whether the auditor's report should be modified. 2. A change from an accounting principle that is not in accordance with the applicable financial reporting framework to one that is in accordance is a correction of a misstatement.