8-K: BM Technologies Re-Engages KPMG for Q3 Review Amidst Merger Agreement

BM Technologies has re-engaged KPMG to review its Q3 financial statements after a previous resignation, due to a pending merger agreement.

Summary

• BM Technologies, Inc. re-engaged KPMG as their independent registered public accounting firm on October 31, 2024, to review the company's interim financial statements for the third quarter of 2024.
• KPMG had previously resigned on August 14, 2024, after completing their review of the second quarter 2024 financials.
• The re-engagement is specifically for the Q3 review due to a pending merger agreement announced on October 25, 2024.
• KPMG's engagement will terminate after the completion of the Q3 review.
• KPMG's audit reports for the years ended December 31, 2023 and 2022 did not contain any adverse opinions or disclaimers.
• There were no disagreements with KPMG on accounting principles or auditing scope, except for a previously disclosed material weakness in internal control over financial reporting as of December 31, 2023, which did not result in any material misstatements.

Sentiment

Score: 5

Explanation: The sentiment is neutral as the re-engagement of KPMG is a procedural step due to the merger, but the previous resignation and material weakness in internal control are concerning.

Positives

• KPMG has agreed to be re-engaged for the Q3 review, ensuring continuity in financial oversight during the merger process.
• The previous audit reports from KPMG did not contain any adverse opinions or disclaimers.
• There were no disagreements with KPMG on accounting principles or auditing scope.

Negatives

• KPMG had previously resigned as the company's auditor.
• A material weakness in internal control over financial reporting was identified as of December 31, 2023.

Risks

• The re-engagement of KPMG is temporary and will end after the Q3 review, requiring the company to find a new auditor for future periods.
• The previously identified material weakness in internal control over financial reporting could pose ongoing risks.

Future Outlook

The company will need to engage a new independent auditor after KPMG completes the review of the Q3 2024 financial statements.

Management Comments

• The Audit Committee of the Company's Board of Directors re-engaged KPMG to serve as the Company's independent registered public accounting firm for purposes of conducting a review of the Company's interim financial statements for the third quarter of 2024.

Industry Context

The change in auditors and subsequent re-engagement is unusual and likely related to the pending merger, which can often trigger a review of the company's financial position by the acquiring company. This is not uncommon in the context of mergers and acquisitions.

Comparison to Industry Standards

• The re-engagement of a previously resigned auditor is not a typical practice and may raise concerns about the company's financial controls and audit process.
• Companies like Fiserv, Global Payments, and PayPal, which are in the same fintech space, typically maintain a consistent relationship with their auditors.
• The material weakness in internal control is a concern, as companies like Block (formerly Square) and Adyen have faced similar issues, which can impact investor confidence.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the previously reported material weakness in internal control.
• The re-engagement of KPMG for the Q3 review provides some assurance of financial oversight during the merger process.

Next Steps

• KPMG will complete the review of the company's interim financial statements for the third quarter of 2024.
• BM Technologies will need to engage a new independent registered public accounting firm after KPMG's engagement ends.

Key Dates

Keywords

KPMG, auditor, financial statements, merger, accounting, internal control, review, BMTX