8-K/A: Skillz Inc. Changes Auditor to Deloitte Amid Control Weaknesses

Skillz Inc. has dismissed Grant Thornton LLP and appointed Deloitte & Touche LLP as its new independent auditor, citing material weaknesses in internal controls.

Summary

• Skillz Inc. (the Company) dismissed Grant Thornton LLP (GT) as its independent registered public accounting firm, effective December 11, 2025.
• The Audit Committee of the Board of Directors approved the selection of Deloitte & Touche LLP (D&T) as the new independent registered public accounting firm for the fiscal year ending December 31, 2025, effective immediately on December 11, 2025.
• GT's audit reports for the fiscal years ended December 31, 2024, and December 31, 2023, did not contain adverse opinions or disclaimers, nor were they qualified or modified, except for an explanatory note in 2024 related to the adoption of ASU 2023-07, Segment Reporting (Topic 280).
• There were no disagreements between the Company and GT on accounting principles, financial statement disclosures, or auditing scope/procedures during the fiscal years ended December 31, 2024, and December 31, 2023, and the subsequent interim period through December 11, 2025.
• The Company reported material weaknesses in internal control over financial reporting during the fiscal years ended December 31, 2024, and December 31, 2023, and through the interim period ending December 11, 2025.
• These material weaknesses were discussed between the Audit Committee and GT, and GT has been authorized to respond fully to inquiries from D&T.
• Neither the Company nor anyone on its behalf consulted D&T regarding accounting principles or audit opinions prior to their engagement.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the disclosure of significant material weaknesses in internal control over financial reporting, which indicates potential risks to financial statement reliability and operational efficiency. While the company is taking action by changing auditors, the underlying issues are a serious concern.

Positives

• Grant Thornton LLP's audit reports for fiscal years 2023 and 2024 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles (except for an explanatory note on ASU 2023-07 in 2024).
• There were no disagreements between the Company and Grant Thornton LLP on accounting principles, financial statement disclosures, or auditing scope or procedures.
• Grant Thornton LLP has agreed with the Company's statements regarding the change in certifying accountant, as evidenced by their concurrence letter to the SEC.

Negatives

• The Company identified material weaknesses in internal control over financial reporting for the fiscal years ended December 31, 2024, and December 31, 2023, and through the interim period ending December 11, 2025.
• Specific material weaknesses include an ineffective risk assessment process, inadequate design and implementation of controls over financial reporting, and insufficient evidence of review for reconciliations, budgets, and key financial close processes.
• Information technology general controls were insufficient, lacking adequate user access controls, program change management controls, and program operations controls.
• Internal control over financial reporting issues included inadequately designed, implemented, or operating controls related to evaluating certain accounting processes, insufficient documentation of management's review, inadequate review of complex accounting assumptions, and a lack of qualified accounting personnel.

Risks

• Material weaknesses in internal control over financial reporting related to risk assessment, including failure to design an effective risk assessment process based on COSO Framework criteria and inadequate design/implementation of controls over financial reporting (e.g., disclosure identification/review, monitoring controls, evidence of review for reconciliations, budgets, and financial close process).
• Material weaknesses in information technology general controls, specifically insufficient user access controls (segregation of duties, restricted access), program change management controls (identification, testing, authorization, implementation), and program operations controls.
• Material weaknesses in internal control over financial reporting, including inadequately designed, implemented, or operating controls for evaluating certain accounting processes, lack of sufficient documentation or evidence for management's review over financial statement areas, inadequate review of complex accounting assumptions, and a lack of qualified accounting personnel.

Future Outlook

The filing indicates that Deloitte & Touche LLP will serve as the independent registered public accounting firm for the Company's fiscal year ending December 31, 2025.

Management Comments

• Todd A. Valli, Chief Accounting Officer, signed the report on behalf of Skillz Inc.

Industry Context

The change in auditor is a significant event for any publicly traded company, often scrutinized by investors. While the filing does not directly relate to broader industry trends, the disclosure of material weaknesses in internal controls is a critical internal issue that can impact investor confidence and regulatory compliance, regardless of industry.

Corporate Governance

Stakeholder Impact

• Shareholders: May face increased scrutiny and potential concerns regarding the reliability of financial reporting due to material weaknesses, potentially impacting stock valuation. The auditor change could be seen as a step towards remediation.
• Investors: Will likely view the material weaknesses as a significant risk factor, requiring close monitoring of the company's remediation efforts and future financial disclosures.
• Regulatory Authorities: The SEC will monitor the company's progress in addressing the disclosed material weaknesses, as these issues can lead to non-compliance with reporting requirements.

Next Steps

• Deloitte & Touche LLP will serve as the independent registered public accounting firm for the Company's fiscal year ending December 31, 2025.
• The Company is expected to address and remediate the identified material weaknesses in internal control over financial reporting.

Key Dates

Recommendation

The disclosure of material weaknesses in internal control over financial reporting is a significant concern, indicating potential risks to the accuracy and reliability of financial statements. While the company has taken a positive step by changing auditors to Deloitte & Touche, the remediation of these weaknesses will require substantial effort and time. An investor should hold the stock to observe the company's progress in addressing these fundamental control issues before making further investment decisions. A 'sell' would be premature without more information on the impact of these weaknesses on financial performance, and a 'buy' is not justified given the current control environment.

Keywords

Skillz Inc., SKLZ, auditor change, Grant Thornton, Deloitte & Touche, independent registered public accounting firm, internal controls, material weaknesses, SEC filing, 8-K/A, corporate governance, financial reporting