8-K: Crawford & Company Appoints KPMG as New Auditor for Fiscal Year 2025

Crawford & Company has selected KPMG as its new independent auditor for the fiscal year ending December 31, 2025, replacing Ernst & Young.

Summary

• Crawford & Company's Audit Committee has chosen KPMG LLP as their independent registered public accounting firm for the fiscal year ending December 31, 2025.
• This decision follows a competitive evaluation process.
• KPMG is currently undergoing standard client evaluation procedures and has not yet formally accepted the engagement.
• Ernst & Young (EY) will continue as the company's auditor for the fiscal year ending December 31, 2024.
• EY's reports for the fiscal years 2022 and 2023 did not contain any adverse opinions or modifications.
• There were no disagreements between Crawford & Company and EY on accounting principles or auditing procedures during the fiscal years 2022 and 2023, and subsequent interim periods, except for the previously disclosed material weaknesses in internal control over financial reporting in 2022.
• Crawford & Company has requested a letter from EY confirming their agreement with the statements made in the 8-K filing.
• The company has not consulted with KPMG on accounting principles or audit opinions prior to their selection.

Sentiment

Score: 7

Explanation: The document is neutral to slightly positive. The change of auditor is a normal business process and the previous auditor had no issues with the financial statements. The only negative is the previously disclosed material weaknesses in internal control over financial reporting.

Positives

• The transition to a new auditor was conducted through a competitive process, suggesting a thorough evaluation.
• EY's audit reports for the past two fiscal years were clean, indicating no major issues with the company's financial statements.
• There were no disagreements between the company and EY on accounting or auditing matters, except for previously disclosed material weaknesses in internal control over financial reporting in 2022.

Negatives

• KPMG has not yet formally accepted the engagement, indicating a potential risk of the appointment not proceeding.
• The company previously disclosed material weaknesses in its internal control over financial reporting in 2022.

Risks

• There is a risk that KPMG may not accept the engagement as the firm is still undergoing standard client evaluation procedures.
• The previously disclosed material weaknesses in internal control over financial reporting could pose ongoing risks.

Future Outlook

The company anticipates KPMG will be their independent auditor for the fiscal year ending December 31, 2025, pending the completion of KPMG's client evaluation procedures.

Management Comments

• The Audit Committee conducted a competitive process to select the new auditor.
• The company has requested a letter from EY confirming their agreement with the statements made in the 8-K filing.

Industry Context

The change in auditors is a common practice for public companies, often driven by regulatory requirements, cost considerations, or a desire for fresh perspectives. The selection of KPMG, a major global accounting firm, is not unusual in this context.

Comparison to Industry Standards

• The process of selecting a new auditor through a competitive process is standard practice for publicly traded companies.
• The lack of disagreements between Crawford & Company and EY, except for the previously disclosed material weaknesses, is generally consistent with industry norms for auditor-client relationships.
• The transition from one Big Four accounting firm (EY) to another (KPMG) is not uncommon among large public companies.

Stakeholder Impact

• Shareholders will be interested in the change of auditor and the implications for financial reporting.
• Employees in the finance and accounting departments will be involved in the transition to the new auditor.

Next Steps

• KPMG will complete its standard client evaluation procedures.
• KPMG will formally accept the engagement as the independent auditor for the fiscal year ending December 31, 2025.
• EY will complete the audit for the fiscal year ending December 31, 2024.

Key Dates

Keywords

auditor, KPMG, Ernst & Young, accounting, audit, financial reporting, internal control, Audit Committee