An (Almost) Unnoticed $497 Million Accounting Error

One telltale sign of a bull market is that investors don't care as much about dodgy corporate accounting practices. A case in point: the public reaction -- or lack thereof -- to a financial restatement disclosed late yesterday afternoon by Williams Cos., the natural-gas producer.

Williams didn't issue a press release about the restatement. As far as I can tell, there have been no news reports about the company's accounting errors, which Williams divulged in a filing with the Securities and Exchange Commission. They aren't a small matter, though.

As a result of the restatement, Williams said its shareholder equity fell $497 million, or 28 percent, to $1.3 billion as of Dec. 31. Additionally, the company said it had "identified a material weakness in internal control over financial reporting," which is never a good sign. Net income wasn't affected.

Shares of Williams were trading for $33.65 this afternoon, down 73 cents, after setting a 52-week high yesterday. The stock is up 88 percent since Oct. 4.

Williams, which is audited by Ernst & Young, said the restatement was necessary to correct errors in deferred tax liabilities related to its investment in Williams Partners LP, a publicly traded master limited partnership in which it owns a 68 percent stake. A Williams spokesman, Jeff Pounds, declined to comment when asked why the company didn't issue a press release flagging the restatement.

The answer seems obvious, though: The company didn't want anyone to write about it. Oh well.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)