8-K: Potbelly Corporation Appoints KPMG as New Independent Auditor, Replacing Deloitte

Potbelly Corporation has selected KPMG as its new independent auditor for the fiscal year ending December 27, 2025, replacing Deloitte & Touche LLP.

Summary

• Potbelly Corporation has appointed KPMG LLP as its new independent registered public accounting firm for the fiscal year ending December 27, 2025.
• This decision follows a competitive process conducted by the Audit Committee of the Board of Directors.
• KPMG's appointment is subject to the completion of their standard client acceptance procedures and the execution of an engagement letter.
• Deloitte & Touche LLP, the previous auditor, will be dismissed after completing the audit for the fiscal year ending December 29, 2024.
• Deloitte's reports for the fiscal years ended December 31, 2023 and December 25, 2022 did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements or reportable events between Potbelly and Deloitte during the fiscal years ended December 29, 2024 and December 31, 2023, and the subsequent interim period through January 3, 2025.
• Potbelly provided Deloitte with a copy of the 8-K filing and requested a letter confirming their agreement with the statements made in the report.
• Deloitte's letter, included as an exhibit, confirms their agreement with certain statements in the 8-K filing and states they have no basis to agree or disagree with other statements.
• Potbelly did not consult with KPMG on any accounting principles, audit opinions, or reportable events prior to their appointment.

Sentiment

Score: 7

Explanation: The document indicates a routine change of auditors with no apparent issues. The lack of disagreements with the previous auditor and the competitive selection process for the new auditor are positive signs. The sentiment is neutral to slightly positive.

Positives

• The transition to a new auditor was the result of a competitive process, suggesting a thorough evaluation by Potbelly's Audit Committee.
• Deloitte's previous audits were clean, with no adverse opinions or qualifications, indicating a sound financial reporting history.
• There were no disagreements or reportable events with the previous auditor, suggesting a smooth relationship and no underlying accounting issues.

Risks

• The change in auditors could introduce a period of adjustment as KPMG becomes familiar with Potbelly's financial reporting processes.
• Although no issues were reported, any change in auditor can sometimes reveal previously unnoticed issues or differences in accounting interpretations.

Future Outlook

The company will be working with KPMG for the audit of the fiscal year ending December 27, 2025.

Industry Context

The change of auditors is a normal business practice, and companies often switch auditors after a period of time or after a competitive process. This change does not appear to be related to any specific industry trend or competitive pressure.

Comparison to Industry Standards

• Switching auditors is a common practice among publicly traded companies, and the process followed by Potbelly appears to be in line with industry standards.
• Many companies, such as McDonald's and Starbucks, have also used the services of large accounting firms like KPMG and Deloitte, indicating that Potbelly's choice is consistent with industry norms.
• The lack of disagreements or reportable events with the previous auditor is a positive sign, as it suggests that the company's financial reporting practices are sound and in line with industry best practices.

Stakeholder Impact

• Shareholders will be informed of the change in auditors.
• Employees in the finance and accounting departments will need to work with the new auditor.
• The change in auditors is not expected to have a significant impact on customers or suppliers.

Next Steps

• KPMG will complete their standard client acceptance procedures and execute an engagement letter.
• Deloitte will complete their audit for the fiscal year ending December 29, 2024.
• KPMG will begin their audit for the fiscal year ending December 27, 2025.

Key Dates

Keywords

auditor, KPMG, Deloitte, accounting, audit, financial reporting, 8-K, independent auditor