This is the first time that revenue recognition, examined
along with all the other Audit Analytics 34 main
categories of individual accounting issues, has been shown
to be a significant factor in auditor litigation. Thus, if a restatement
occurs, the specific, individual accounting issue
that matters the most for auditor liability is revenue. In each
of the six models, revenue recognition, when it was one of
the issues implicated in a restatement, was always significant,
both with naming the auditor a defendant in litigation
and with a more severe, negative outcome for the auditor
in litigation. No other accounting issue was always significant.
The primacy of revenue over all of the other individual
accounting issues is clear.