Methodology

RedFlagFilings scans SEC EDGAR every day for five kinds of accounting red flags, then verifies each one against the filing text before publishing it. Every event page shows the exact sentence we relied on.

Auditor changes (8-K Item 4.01)

The 8-K must contain Item 4.01. We classify the change as a dismissal, a resignation, or routine when the filing says the change came from the audit firm merging with or being acquired by another firm. Routine changes get severity 1. Resignations and reported disagreements score higher.

Non-reliance / restatements (8-K Item 4.02)

The filing text must contain Item 4.02 and explicit language that prior financial statements should no longer be relied upon. Base severity 5.

Late filings (NT 10-K / NT 10-Q)

A notice of late filing alone is not enough. We check the company's EDGAR filing history and drop notices where the report was filed within the extension period (15 days for 10-K, 5 for 10-Q). We publish ones filed after the extension, still missing, or (with lower severity) whose extension is still running.

Going-concern doubt (10-K and 10-Q)

We fetch the filing and require an explicit statement that substantial doubt exists about the company's ability to continue as a going concern, either in the independent auditor's report or in management's conclusion. We exclude language saying the doubt was alleviated, that no substantial doubt exists, and hypothetical risk-factor wording ("could raise substantial doubt"). Auditor-report findings score higher. 10-Q findings score lower because they are unaudited.

Severity (1-5)

Starts from the base severity for the event type, then adjusts for: auditor resignation, disagreements, going-concern source, a filing still missing after its extension, and other red flags at the same company in the same period. Scores are heuristics, not ratings or recommendations.