8-K: Apple Hospitality REIT Appoints KPMG as New Independent Auditor, Replacing Ernst & Young

Apple Hospitality REIT has appointed KPMG as its new independent auditor, replacing Ernst & Young, effective February 22, 2024.

Summary

• Apple Hospitality REIT has changed its independent registered public accounting firm from Ernst & Young LLP (E&Y) to KPMG LLP (KPMG).
• The change was approved by the Audit Committee of the Board of Directors on February 19, 2024.
• KPMG will serve as the company's independent auditor for the fiscal year ending December 31, 2024.
• E&Y's dismissal is effective February 22, 2024, following the completion of their audit for the fiscal year ended December 31, 2023.
• E&Y's audit reports for the fiscal years ended December 31, 2023 and 2022 did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements between the company and E&Y on accounting principles, financial statement disclosure, or auditing scope during the fiscal years ended December 31, 2023 and 2022, and through February 22, 2024.
• The company did not consult with KPMG on accounting principles or audit opinions prior to their appointment.

Sentiment

Score: 7

Explanation: The document reflects a routine change in auditors with no indication of any underlying issues. The transition appears smooth and well-managed, which is a positive sign.

Positives

• The transition to a new auditor was conducted through a competitive selection process, suggesting a thorough and considered decision.
• E&Y's audit reports for the past two fiscal years were clean, indicating no issues with the company's financial statements.
• There were no disagreements between the company and E&Y, suggesting a smooth working relationship.

Risks

• The change in auditors could potentially introduce a period of adjustment as KPMG becomes familiar with the company's financial processes and controls.
• Although no issues were reported, any change in auditor can introduce a small risk of unforeseen issues.

Industry Context

The change of auditors is a routine event for public companies and is often the result of a periodic review process. It is not uncommon for companies to switch auditors to ensure independence and fresh perspectives.

Comparison to Industry Standards

• Switching auditors is a common practice among publicly traded companies, with many companies periodically reviewing their audit firm to ensure independence and obtain a fresh perspective.
• The selection of KPMG, a Big Four accounting firm, is consistent with industry standards for large REITs like Apple Hospitality.
• The lack of disagreements with the previous auditor, E&Y, is also a positive sign, indicating a healthy relationship and no underlying issues.

Stakeholder Impact

• The change in auditors is unlikely to have a significant impact on shareholders, employees, customers, or suppliers.
• The smooth transition and lack of disagreements with the previous auditor should reassure stakeholders.

Key Dates

Keywords

auditor, KPMG, Ernst & Young, accounting firm, audit, financial statements, Audit Committee