SPAR Group Inc. has announced a regulatory issue concerning its financial statements for the periods ending June 30, 2024, and September 30, 2024. The company's management and Audit Committee, in consultation with their independent auditor BDO USA P.C., have determined that these financial statements should not be relied upon due to errors. The errors stem from a misclassification related to the sale of its 51% stake in a Brazilian joint venture, which generated a $5.9 million economic benefit. The transaction's financial handling will require restatement, as $7.5 million was incorrectly reported as consideration instead of a capital distribution. This issue has revealed a material weakness in SPAR's internal controls over financial reporting, prompting a restatement effort to correct the financial documents in the upcoming 2024 Annual Report.
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