8-K: Broadway Financial Corporation Appoints Crowe LLP as New Independent Auditor, Replacing Moss Adams LLP

Broadway Financial Corporation has appointed Crowe LLP as its new independent auditor for the fiscal year ending December 31, 2025, replacing Moss Adams LLP.

Summary

• Broadway Financial Corporation's Audit Committee approved the appointment of Crowe LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2025.
• This appointment is subject to the completion of Crowe's standard client acceptance procedures and the execution of an engagement letter.
• Moss Adams LLP was dismissed as the company's independent registered public accounting firm, effective upon the issuance of their audit report for the fiscal year ending December 31, 2024.
• There were no consultations with Crowe regarding accounting principles or audit opinions prior to their appointment.
• Moss Adams' audit reports for 2022 and 2023 did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements with Moss Adams on accounting principles, financial statement disclosure, or auditing scope.
• The company previously reported material weaknesses in internal control over financial reporting in filings from May 20, 2024, May 24, 2024, August 14, 2024 and November 13, 2024.
• Moss Adams has been authorized to discuss these material weaknesses with Crowe.

Sentiment

Score: 7

Explanation: The document indicates a routine change of auditors with no major issues reported. The previously reported material weaknesses are a concern, but the company is addressing them.

Positives

• The transition to a new auditor appears to be smooth, with no reported disagreements with the previous auditor.
• Moss Adams' audit reports for the past two years were clean, indicating no major issues with the company's financial statements.
• The company is addressing previously reported material weaknesses in internal control.

Negatives

• The company has previously reported material weaknesses in internal control over financial reporting.
• The change in auditors could indicate a need for a fresh perspective on the company's financials.

Risks

• The material weaknesses in internal control over financial reporting could pose a risk to the accuracy of future financial statements.
• The transition to a new auditor could introduce some uncertainty in the short term.

Future Outlook

The company will be working with Crowe LLP for the audit of the fiscal year ending December 31, 2025.

Industry Context

Changes in auditors are not uncommon, but it is important to ensure a smooth transition and maintain the integrity of financial reporting. The appointment of Crowe LLP is a standard process for companies listed on the Nasdaq.

Comparison to Industry Standards

• The change of auditors is a common practice in the industry, with companies periodically reviewing their audit partners.
• The fact that there were no disagreements with Moss Adams is a positive sign, as it suggests that the change was not due to any major issues.
• The previously reported material weaknesses in internal control are not uncommon, but it is important that the company continues to address them.

Stakeholder Impact

• Shareholders will be interested in the smooth transition to a new auditor.
• The company's employees will need to work with the new auditor.
• Creditors will be interested in the company's financial reporting.

Next Steps

• Crowe LLP will complete their standard client acceptance procedures.
• An engagement letter will be executed with Crowe LLP.
• Crowe LLP will conduct the audit for the fiscal year ending December 31, 2025.

Key Dates

Keywords

auditor, Crowe LLP, Moss Adams LLP, independent accounting firm, financial statements, audit, internal control, material weaknesses