8-K: Urban One Dismisses Ernst & Young, Appoints PricewaterhouseCoopers as New Independent Auditor

Urban One, Inc. has dismissed Ernst & Young LLP as its independent auditor and appointed PricewaterhouseCoopers LLC, effective April 7, 2025.

Summary

• Urban One, Inc. announced the dismissal of Ernst & Young LLP (EY) as its independent registered public accounting firm, effective April 7, 2025.
• The decision was approved by the Audit Committee of the Company's Board of Directors.
• PricewaterhouseCoopers LLC (PwC) has been appointed to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2025, also effective April 7, 2025.
• The audit reports of EY on the Company's consolidated financial statements for the years ended December 31, 2024 and December 31, 2023 contained no adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
• During the fiscal years ended December 31, 2024 and December 31, 2023 and through April 7, 2025, the Company had no disagreements with EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure that would have caused EY to make reference to the subject matter of the disagreement in connection with its reports on the financial statements of the Company for such years.
• The company disclosed material weaknesses in internal control over financial reporting in its Annual Reports on Form 10-K for the years ended December 31, 2024 and December 31, 2023, some of which have been remediated as reflected in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
• These material weaknesses related to Control Environment, Risk Assessment, Information and Communication, and Monitoring, as well as IT General Control Activities and Control Activities and Information and Communication.
• The Audit Committee discussed this matter with EY, and the Company has authorized EY to respond fully to any inquiries of PwC with respect to this matter.
• EY has provided a letter to the United States Securities and Exchange Commission indicating its agreement with the disclosures made by the Company in the Current Report on Form 8-K.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While there are no explicit disagreements with the outgoing auditor, the disclosure of material weaknesses in internal control tempers any positive aspects.

Positives

• EY's audit reports for 2023 and 2024 contained no adverse opinions, disclaimers, or qualifications, suggesting a clean audit history.
• The company disclosed that some of the material weaknesses in internal control over financial reporting have been remediated as reflected in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
• EY agrees with the statements made by Urban One in its Form 8-K regarding the auditor change, indicating transparency and alignment between the company and its former auditor.

Negatives

• The company disclosed material weaknesses in internal control over financial reporting in its Annual Reports on Form 10-K for the years ended December 31, 2024 and December 31, 2023.
• The material weaknesses related to Control Environment, Risk Assessment, Information and Communication, and Monitoring, as well as IT General Control Activities and Control Activities and Information and Communication.

Risks

• The disclosed material weaknesses in internal control over financial reporting could indicate potential risks in the company's financial reporting processes.
• The transition to a new auditor, PwC, could present challenges in ensuring a smooth and accurate audit process for the fiscal year ending December 31, 2025.
• Failure to fully remediate the identified material weaknesses could lead to future financial misstatements or regulatory scrutiny.

Future Outlook

The Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements.

Industry Context

Changes in auditors are not uncommon, but they often raise questions about the reasons behind the change. Investors will be looking for reassurance that the change was not due to any disagreements over accounting practices or financial reporting.

Comparison to Industry Standards

• When a company changes auditors, it is typical for the audit committee to carefully evaluate potential replacements based on their expertise, industry knowledge, and reputation.
• Companies like iHeartMedia, Cumulus Media, and Audacy are also in the broadcasting and media industry and are comparable to Urban One.
• These companies are expected to maintain high standards of financial reporting and internal controls, and any changes in auditors or disclosures of material weaknesses would be closely scrutinized by investors and regulators.

Stakeholder Impact

• Shareholders may be concerned about the disclosed material weaknesses in internal control and the potential impact on the accuracy of financial reporting.
• Employees involved in financial reporting may need to adapt to new processes and controls implemented to address the material weaknesses.
• Creditors may scrutinize the company's financial statements more closely due to the disclosed material weaknesses.

Next Steps

• PwC will conduct the audit for the fiscal year ending December 31, 2025.
• The Company will continue to remediate the identified material weaknesses in internal control over financial reporting.

Key Dates

Keywords

auditor, PricewaterhouseCoopers, Ernst & Young, internal control, financial reporting, material weaknesses, Urban One