Financial Restatement Analysis on Molson Coors Breweries Co.

Financial Restatement Analysis
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Introduction
Financial restatements have recently become more and more common. The number of companies being listed in publishing financial restatements has increased. The major causes of publishing these financial restatements are misleading and inaccurate information in the previously published financial statements (Yahzi, 1). When errors and misleading financial information on a company's published financial statements are identified, the auditors, the public companies, or the SEC summons the company involved to restate the financial statements. However, accountants evaluate the errors to determine whether they are material enough to warrant a restatement. This paper presents an analysis of Molson Coors breweries co. financial restatement of 2019, its impact on the company's stock price, and managerial actions that can help mitigate financial restatements in the future. An evaluation of the financial restatement against the company's ethical standards will also be explored. Molson Coors Breweries' financial restatement can be found at /article/molson-coors-restatement-idUSL3N2073NV
Background information on Molson Coors breweries co. and its Financial Restatement
Molson Coors breweries is a multinational brewing company that deals with the manufacturing and supply of beverages such as the blue moon and Milwaukee's Best. Its headquarters are based in Chicago, Illinois, and it operates in more than 70 countries globally. Molson Coors Breweries co. filed financial restatements for the physical years 2016 and 2017. The restatement was published after the company acknowledged having deferred tax liabilities amounting to $247 million. The company stated that the incorrect income tax calculations arose from its acquisition of SAB Miller's 58% interest in the MillerCoors joint venture in the 2016 fiscal year. Therefore, restating 2016 financial statements reflected a $339 million increase in deferred tax liabilities. Restating 2017 financial statements reflected a $151 million decrease in deferred tax liabilities (Heller, 2). The material weakness in the company's internal controls and financial reporting that resulted in the deferred income tax liabilities called for subsequent analysis. The analysis would help the company identify the specific mistakes, plan on how to mitigate similar mistakes in the future, and plan how to deal with the impact of the mistakes that resulted in the restatement.
Short-term Impact of the Financial Restatement on the Stock Price of the Company
A company’s stock price is its current market value. Ideally, the stock price of a company drops significantly after the publication of a financial restatement. A reduction in the stock price translates to a decrease in the company's value and increased capital costs and therefore weakens the company's financial capacity in the short term (Yahzi, 1). The financial restatements of Molson Coors Breweries co. had an adverse impact on the company’s stock price. For the company to deal with the adverse effects of the financial restatement, it had to work on rebuilding its reputation (Yahzi, 1). Since the reputation was already affected negative...