8-K: Forward Air Corporation Changes Certifying Accountant, Appoints KPMG

Forward Air Corporation dismisses Ernst & Young LLP and engages KPMG as its new independent registered public accounting firm.

Summary

• Forward Air Corporation has dismissed Ernst & Young LLP (EY) as its independent registered public accounting firm, effective March 24, 2025.
• The dismissal was authorized by the Audit Committee of the Board of Directors.
• During the fiscal years 2023 and 2024, there were no disagreements between Forward and EY on accounting principles, financial statement disclosure, or auditing scope, except for a material weakness in internal controls over financial reporting as of December 31, 2024, related to the Omni Newco LLC business combination.
• The material weakness involved initial purchase accounting, accounting for related income taxes, and accounting for impairment related to the Omni business.
• On March 27, 2025, KPMG was engaged by the Audit Committee as Forward's new independent registered public accounting firm.
• During the fiscal years 2023 and 2024, and the interim period from January 1, 2025, through March 27, 2025, Forward did not consult with KPMG on any matters requiring a decision as to any accounting, auditing, or financial reporting issue.

Sentiment

Score: 5

Explanation: The announcement of a change in auditors is neutral, but the disclosure of a material weakness in internal controls is a negative factor. The quick appointment of a new auditor is a positive sign.

Positives

• The transition to a new auditor, KPMG, was completed quickly, within three days of dismissing the previous auditor.
• EY agreed with the statements made by Forward Air Corporation regarding their dismissal.

Negatives

• A material weakness in internal controls over financial reporting related to the Omni Newco LLC business combination was identified as of December 31, 2024.

Risks

• The material weakness in internal controls over financial reporting related to the Omni Newco LLC business combination could indicate potential issues with the accuracy and reliability of financial reporting.
• The transition to a new auditor could present challenges in ensuring a smooth audit process and maintaining compliance with regulatory requirements.

Future Outlook

The document does not contain specific forward-looking statements regarding financial performance or future business activities.

Industry Context

Changes in auditors are not uncommon, but they can raise concerns among investors if they are accompanied by disagreements or reportable events, such as the material weakness identified in this case. Companies often change auditors to obtain a fresh perspective or to align with their evolving business needs.

Comparison to Industry Standards

• The Big Four accounting firms (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers) audit the vast majority of large public companies.
• Changes in auditors are tracked by regulatory bodies and industry analysts to monitor audit quality and independence.
• Material weaknesses in internal controls are often compared to those of peer companies to assess the severity of the issue.

Stakeholder Impact

• Shareholders may be concerned about the material weakness in internal controls and the potential impact on financial reporting.
• Employees in the accounting and finance departments may be involved in addressing the material weakness and implementing new controls.
• The new auditor, KPMG, will need to conduct a thorough review of Forward's financial statements and internal controls.

Key Dates

Keywords

independent registered public accounting firm, KPMG, Ernst & Young, auditor, Audit Committee, material weakness, Omni Newco LLC, financial reporting, Forward Air Corporation