8-K/A: Potbelly Corporation Announces Auditor Change: KPMG Replaces Deloitte

Potbelly Corporation has replaced Deloitte & Touche LLP with KPMG LLP as its independent registered public accounting firm, effective after Deloitte completed its audit for the fiscal year ended December 29, 2024.

Summary

• Potbelly Corporation announced the dismissal of Deloitte & Touche LLP as its independent registered public accounting firm.
• The dismissal was effective March 6, 2025, following the completion of Deloitte's audit of the company's consolidated financial statements for the year ended December 29, 2024.
• KPMG LLP has been appointed as the new independent registered public accounting firm for the fiscal year ending December 28, 2025.
• KPMG's appointment is subject to completion of their standard client acceptance procedures and execution of an engagement letter.
• The review of the company's condensed consolidated financial statements for the quarter ending March 30, 2025, will be KPMG's first engagement.
• During the relevant periods, there were no disagreements between Potbelly and Deloitte regarding accounting principles, financial statement disclosure, or auditing scope.
• Deloitte's reports on Potbelly's financial statements for the fiscal years ended December 29, 2024, and December 31, 2023, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified.
• Potbelly provided Deloitte with a copy of the Form 8-K/A and requested a letter stating their agreement with the company's statements.
• Deloitte confirmed their agreement with the statements made in the first four paragraphs of Item 4.01 of the Form 8-K/A.
• Potbelly did not consult with KPMG on accounting principles, audit opinions, or any matters that were the subject of disagreement or reportable events during the specified periods.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The auditor change appears to be a routine matter with no indications of underlying issues. The selection of a reputable firm like KPMG is reassuring.

Positives

• The transition to a new auditor appears to be smooth, with no reported disagreements or issues with the previous auditor, Deloitte.
• Deloitte's audit reports for the past two fiscal years were clean, with no adverse opinions or qualifications.
• The company is proactively disclosing information about the auditor change and providing necessary documentation.

Risks

• The transition to a new auditor could present unforeseen challenges or require additional time and resources.
• There is always a risk of potential issues arising during KPMG's initial review and audit processes.

Future Outlook

KPMG will begin its role as the independent auditor with the review of the condensed consolidated financial statements for the quarter ending March 30, 2025, and will conduct the audit for the fiscal year ending December 28, 2025.

Industry Context

Auditor changes are not uncommon, but they can be significant events for publicly traded companies. Investors often scrutinize the reasons behind such changes, looking for any potential red flags or concerns about a company's financial reporting practices. The selection of KPMG, a well-established and reputable firm, suggests a commitment to maintaining high standards of financial oversight.

Comparison to Industry Standards

• Auditor changes are a normal part of business, and companies like McDonald's, Starbucks, and Chipotle have all changed auditors at some point.
• The key is whether the change is accompanied by any disagreements or reportable events, which does not appear to be the case here.
• The selection of KPMG is consistent with industry standards, as it is one of the 'Big Four' accounting firms.

Stakeholder Impact

• Shareholders may view the auditor change as a routine matter, provided there are no indications of underlying issues.
• Employees in the finance and accounting departments will need to work with the new auditor, KPMG.
• The change should not directly impact customers or suppliers.

Next Steps

• KPMG will complete its standard client acceptance procedures and execute an engagement letter.
• KPMG will begin reviewing Potbelly's condensed consolidated financial statements for the quarter ending March 30, 2025.
• KPMG will conduct the audit for the fiscal year ending December 28, 2025.

Key Dates