8-K: ReShape Lifesciences Inc. Changes Independent Auditor from RSM US LLP to Haskell & White LLP

ReShape Lifesciences Inc. has replaced its independent auditor, RSM US LLP, with Haskell & White LLP, effective April 8, 2024.

Summary

• ReShape Lifesciences Inc. dismissed RSM US LLP as their independent registered public accounting firm on April 8, 2024.
• The decision was approved by the Audit Committee of the Board of Directors.
• Haskell & White LLP was engaged as the new independent registered public accounting firm for the fiscal year ending December 31, 2024, and related interim periods.
• RSM's audit reports for 2023 and 2022 did not contain any adverse opinions or disclaimers, but included an emphasis of matter paragraph regarding the company's ability to continue as a going concern.
• There were no disagreements between ReShape Lifesciences and RSM on accounting principles, financial statement disclosure, or auditing scope.
• The company reported material weaknesses in internal control over financial reporting in their 2023 and 2022 annual reports.
• ReShape Lifesciences did not consult with Haskell & White on accounting principles or audit opinions prior to their appointment.

Sentiment

Score: 4

Explanation: The change of auditor, combined with the going concern statement and material weaknesses in internal control, creates a negative sentiment. However, the lack of disagreements with the previous auditor is a positive.

Positives

• There were no disagreements between ReShape Lifesciences and RSM on any accounting or auditing matters.
• RSM's audit reports did not contain any adverse opinions or disclaimers.

Negatives

• RSM's audit reports included an emphasis of matter paragraph regarding the company's ability to continue as a going concern.
• The company has reported material weaknesses in its internal control over financial reporting for both 2023 and 2022.

Risks

• The emphasis of matter paragraph in RSM's audit reports raises concerns about the company's financial stability.
• The reported material weaknesses in internal control over financial reporting could indicate potential issues with the accuracy of financial statements.

Management Comments

• The company, with prior approval of the Audit Committee, dismissed RSM and engaged Haskell & White as their new auditor.

Industry Context

Changes in auditors are not uncommon, but the reasons for the change and the previous auditor's going concern statement are important factors for investors to consider. The change may be related to cost, service quality, or other factors.

Comparison to Industry Standards

• Auditor changes are not unusual, but the circumstances surrounding this change, including the going concern statement, warrant scrutiny.
• Companies in similar financial situations may also experience auditor changes, but the lack of disagreements with the previous auditor is a positive sign.
• The material weaknesses in internal control are a concern and should be addressed by the company to meet industry standards for financial reporting.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the going concern statement.
• Creditors may also be concerned about the company's financial stability.
• Employees may be impacted by any potential changes in the company's operations.

Next Steps

• Haskell & White will conduct the audit for the fiscal year ending December 31, 2024.
• The company will need to address the material weaknesses in internal control over financial reporting.

Key Dates

Keywords

auditor, accounting, financial reporting, RSM US LLP, Haskell & White LLP, internal control, going concern