8-K: Better Choice Company Inc. Changes Independent Auditor from BDO to Marcum LLP

Better Choice Company Inc. has dismissed BDO USA, P.C. as its independent auditor and engaged Marcum LLP, effective for the fiscal year ending December 31, 2024.

Summary

• Better Choice Company Inc. has changed its independent registered public accounting firm.
• BDO USA, P.C. was dismissed on July 12, 2024, following a notification on July 9, 2024.
• The Board of Directors approved the engagement of Marcum LLP as the new independent auditor for the fiscal year ending December 31, 2024.
• BDO's reports for the fiscal years ended December 31, 2022 and 2023 did not contain adverse opinions or disclaimers, except for a going concern qualification.
• There were no disagreements between the Company and BDO on accounting principles, financial statement disclosure, or auditing scope.
• The company reported material weaknesses in internal controls in its 2023 annual report, specifically related to cybersecurity, complex transactions, and revenue recognition.
• One material weakness related to cybersecurity was remediated as of March 31, 2024.
• The company has not consulted with Marcum on accounting principles or audit opinions prior to their engagement.

Sentiment

Score: 3

Explanation: The change in auditors, coupled with a going concern qualification and previously reported material weaknesses, indicates a negative outlook for the company's financial health.

Positives

• The company has remediated a material weakness related to cybersecurity as of March 31, 2024.
• There were no disagreements between the company and BDO on accounting principles or auditing scope.

Negatives

• The company dismissed its independent auditor, BDO USA, P.C.
• BDO's audit reports for 2022 and 2023 included a going concern qualification.
• The company reported material weaknesses in internal controls related to cybersecurity, complex transactions, and revenue recognition in its 2023 annual report.

Risks

• The change in auditors could raise concerns among investors.
• The previously reported material weaknesses in internal controls could indicate ongoing issues.
• The going concern qualification in BDO's reports suggests potential financial instability.

Future Outlook

The company will be working with Marcum LLP for the fiscal year ending December 31, 2024.

Management Comments

• The Board of Directors, upon the recommendation of the audit committee, approved the dismissal of BDO and the engagement of Marcum.

Industry Context

Changes in auditors are not uncommon, but they can sometimes signal underlying issues or a desire for a fresh perspective on financial reporting. The fact that the company had material weaknesses in internal controls may have contributed to the change.

Comparison to Industry Standards

• The change of auditors is not unusual, but the presence of a going concern qualification and material weaknesses in internal controls is concerning.
• Companies like Beyond Meat and Tattooed Chef have also faced challenges with internal controls and financial reporting, but the specific issues and auditor changes vary.
• The remediation of the cybersecurity weakness is a positive step, but the other weaknesses need to be addressed to meet industry standards for financial reporting.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the going concern qualification.
• Employees may be affected by the company's financial instability.
• Creditors may be more cautious about extending credit to the company.

Next Steps

• Marcum LLP will conduct the audit for the fiscal year ending December 31, 2024.
• The company will need to address the remaining material weaknesses in internal controls.

Key Dates

Keywords

auditor, accounting, BDO, Marcum, internal controls, financial statements, material weakness, cybersecurity, audit, going concern