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Item 4.01
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Changes in Registrant’s Certifying Accountant.
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(a)
Dismissal of Previous Independent Registered Public Accounting Firm
On December 17, 2018, Celadon Group, Inc., a Delaware corporation (the “Company”), dismissed BKD, LLP (“BKD”) as the Company’s independent registered public accounting firm. The decision to change accountants was approved by the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors.
As previously disclosed in a Form 8-K dated May 1, 2017, the Audit Committee concluded that the Company’s financial statements for the fiscal year ended June 30, 2016 and quarters ended September 30 and December 31, 2016, and related reports of BKD, should not be relied upon. As previously disclosed in a Form 8-K dated April 3, 2018, the Audit Committee and the Company’s management concluded that the annual financial statements for the Company’s 2014 and 2015 fiscal years, the unaudited quarterly reports issued during such periods, and the unaudited quarterly reports issued during fiscal 2016, should no longer be relied upon, and that the Company had concluded there were deficiencies in its internal control over financial reporting that constituted material weaknesses for each of the effected periods and, as a result, management’s reports on its internal control over financial reporting as of June 30, 2014, June 30, 2015, and June 30, 2016 should no longer be relied upon. The assessment of these matters and their impact on subsequent periods is ongoing. BKD has not issued an audit report for the fiscal years ended June 30, 2017 or 2018, the Company’s two most recent fiscal years.
During the Company’s two most recent fiscal years and the subsequent interim period to
December 17
, 2018, there were no disagreements between BKD and the Company on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to BKD’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with an audit report.
As previously disclosed in a Form 8-K dated May 1, 2017, on April 25, 2017, BKD informed the chair of the Audit Committee that it was withdrawing its reports on the June 30, 2016, September 30, 2016, and December 31, 2016 financial statements of the Company (the “BKD Withdrawn Reports”) and that those reports should no longer be relied upon. BKD advised the Company that additional information relating to transactions involving revenue equipment held for sale had come to BKD’s attention subsequent to BKD’s issuance of its audit report on the Company’s June 30, 2016 financial statements and after the issuance of BKD’s review reports on the Company’s September 30, 2016 and December 31, 2016 interim financial statements. BKD further advised the Company that, in accordance with PCAOB Auditing Standard 2905, BKD had performed additional procedures to evaluate this information, including requesting explanations and supporting documentation from the Company’s management. Based on the results of BKD’s procedures, BKD advised the Company that BKD was unable to obtain sufficient appropriate audit evidence to provide a reasonable basis to support the BKD Withdrawn Reports. Subsequent to the withdrawal of its reports, BKD has advised the Company that (i) internal controls necessary for the Company to develop reliable financial statements did not exist with respect to the BKD Withdrawn Reports; and (ii) information had come to BKD’s attention that has led it to no longer be able to rely on former management’s representations with respect to the BKD Withdrawn Reports. The Audit Committee has discussed these matters with BKD.
Other than as set forth above, there were no “reportable events” under Item 304(a)(1)(v) of Regulation S-K that occurred during the Company’s two most recent fiscal years and the subsequent interim period to
December 17
, 2018.
The Audit Committee has authorized BKD to respond fully to inquires of the Company’s successor auditor, Grant Thornton LLP (“Grant Thornton”). The Company provided BKD with a copy of the disclosure it is making in this report in response to Item 304(a) of Regulation S-K and requested that BKD furnish the Company with a copy of its letter addressed to the Securities and Exchange Commission (the “SEC”), pursuant to Item 304(a)(3) of Regulation S-K, stating whether BKD agrees with the statements made by the Company in response to Item 304(a) of Regulation S-K. A copy of BKD’s letter to the SEC dated December 21, 2018, is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b)
Appointment of New Independent Registered Public Accounting Firm
On December 21, 2018, the Company engaged Grant Thornton as the Company’s new independent registered public accounting firm, effective immediately. The engagement was previously approved by the Audit Committee and the Audit Committee authorized the Company to engage Grant Thornton. The Company will work with Grant Thornton to complete its audits of the Company’s financial statements for the required unreported periods as soon as practicable.
During the Company’s two most recent fiscal years and during the subsequent interim periods to December 21, 2018, neither the Company nor anyone acting on its behalf consulted with Grant Thornton regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that Grant Thornton concluded was an important factor considered by the Company in reaching its decision as to the accounting, auditing, or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
