Big4 Auditor Changes week ending 09/08/13

A few Big4 auditor changes to report in this holiday shortened week.  Anthera Pharmaceuticals put their audit out to bid, and ended up dismissing Deloitte in favor of 2nd tier BDO.

EY resigned as auditor of Bio-Rad Laboratories, a company with $2 billion in annual revenues. Last year, Bio-Rad paid EY in excess of $7 million for audit, tax, and other work.  It’s a big number to walk away from, but evidently something happened.  Bio-Rad’s latest 10-Q contained some corrections to Q1 numbers for immaterial adjustments to gains/losses on available for sale investments.  A bit embarrassing, but probably not a reason to resign.  The 8-K filing might hold the key, as it references a laundry list of significant deficiencies that all add up to a material weakness.  Problems with the accounting close, revenue recognition, and financial reporting processes, as well as expenditure controls.  Maybe for EY, it adds up to too much risk.

Speaking of risk, EY did pick up the Intra-Cellular Therapies audit.  This last week, Intra-Cellular completed a reverse merger with an unnamed, “public shell company with no prior business operations.”  Due to the risks, Big4 firms tend to steer clear of reverse IPOs. Guess in this case risk was reduced to an acceptable level. Either that or the fees are astronomical.

Filing Date Company Location Old Auditor New Auditor Dismissal / Resignation
9/4/2013 Anthera Pharmaceuticals, Inc. CA Deloitte & Touche LLP BDO USA LLP Dismissal
9/5/2013 Intra-Cellular Therapies, Inc. NY Raich Ende Malter & Co. Ernst & Young LLP Dismissal
9/6/2013 Bio-Rad Laboratories, Inc. CA Ernst & Young LLP Resignation

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As always, we’ll continue to bring you the latest Big4 auditor change information, along with relevant insights.  See you again next week.

Round and round and round…

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