8-K: Runway Growth Finance Corp. Changes Independent Auditor, Appoints Deloitte & Touche LLP

Runway Growth Finance Corp. dismisses RSM US LLP and appoints Deloitte & Touche LLP as its new independent registered public accounting firm.

Summary

• Runway Growth Finance Corp. announced the dismissal of RSM US LLP as their independent registered public accounting firm on January 23, 2025.
• RSM had served as the company's auditor since its inception.
• The audit reports from RSM for the fiscal years ended December 31, 2022 and 2023 did not contain any adverse opinions, disclaimers, or qualifications regarding uncertainty, audit scope, or accounting principles.
• There were no disagreements between the company and RSM on accounting principles, financial statement disclosure, or auditing scope/procedure.
• On January 23, 2025, the Board of Directors, upon recommendation from the Audit Committee, approved the appointment of Deloitte & Touche LLP as the new independent registered accounting firm.
• Deloitte will audit the company's consolidated financial statements for the fiscal year ending December 31, 2024.
• Prior to the appointment, the company did not consult with Deloitte regarding accounting principles or the type of audit opinion that might be rendered.

Sentiment

Score: 7

Explanation: The announcement is neutral to slightly positive. The change in auditors appears to be well-managed and without any apparent underlying issues. The appointment of a reputable firm like Deloitte is reassuring.

Positives

• The transition to a new auditor appears to be amicable, with no reported disagreements between Runway Growth Finance Corp. and RSM.
• RSM confirmed their agreement with the company's statements regarding their dismissal in a letter to the SEC.
• The company swiftly appointed a new auditor, Deloitte & Touche LLP, ensuring continuity in financial oversight.

Future Outlook

The company will have its consolidated financial statements for the fiscal year ending December 31, 2024 audited by Deloitte & Touche LLP.

Industry Context

Changes in auditors are not uncommon, but they can sometimes signal underlying issues within a company. In this case, the transition appears smooth, with no reported disagreements. The appointment of Deloitte, a Big Four accounting firm, suggests a commitment to maintaining high standards of financial reporting.

Comparison to Industry Standards

• Switching auditors is a normal part of corporate governance, but the circumstances surrounding the change are important.
• Companies like Ares Capital Corporation (ARCC) and Prospect Capital Corporation (PSEC), which are also BDCs, periodically review their audit arrangements.
• The key is whether the change is due to disagreements or simply a routine review process.
• The fact that RSM provided a clean audit opinion for the previous years and agreed with the company's statements suggests a smooth transition, which is a positive sign compared to situations where auditor changes are contentious.

Stakeholder Impact

• The change in auditors is unlikely to have a significant impact on stakeholders, as it appears to be a routine transition.
• Shareholders may view the appointment of Deloitte as a positive sign, indicating a commitment to strong financial oversight.

Key Dates