8-K: Priority Tech Changes Auditor, Engages KPMG

Priority Technology Holdings, Inc. announced the dismissal of Ernst & Young LLP and the engagement of KPMG LLP as its new independent registered public accounting firm, effective March 11, 2026.

Summary

• The Audit Committee of Priority Technology Holdings, Inc. approved the dismissal of Ernst & Young LLP (EY) and the engagement of KPMG LLP (KPMG) as the company's independent registered public accounting firm on March 11, 2026.
• EY's reports on the consolidated financial statements for the fiscal years ended December 31, 2025, and 2024 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified.
• A material weakness in the company's internal control over financial reporting, related to the design and operation of certain automated controls for third-party processor data transformation, was previously reported.
• This material weakness was disclosed in the 2024 Form 10-K (filed March 6, 2025) and quarterly reports for March 31, June 30, and September 30, 2025 (filed May 6, August 7, and November 6, 2025, respectively).
• The material weakness was subsequently remediated, as reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (filed March 10, 2026).
• There were no disagreements (as defined by Regulation S-K) between the company and EY on accounting principles, financial statement disclosure, or auditing scope/procedures.
• There were no reportable events (as defined by Regulation S-K), other than the remediated material weakness, discussed between the Audit Committee and EY.
• The company did not consult with KPMG regarding accounting principles or audit opinions prior to their engagement.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive development. While a material weakness was previously reported, its remediation and the smooth transition to another reputable auditor without disagreements are positive signs for corporate governance and financial reporting integrity.

Positives

• The previously reported material weakness in internal control over financial reporting has been remediated, as disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
• There were no disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedures with the former auditor, Ernst & Young LLP.
• The former auditor, Ernst & Young LLP, has provided a letter to the SEC agreeing with the company's statements regarding the dismissal, indicating a smooth transition.

Negatives

• A material weakness in internal control over financial reporting related to the design and operation of certain automated controls existed during fiscal years ended December 31, 2025, and 2024, and subsequent interim periods, though it has since been remediated.

Risks

• The past existence of a material weakness in internal control over financial reporting, even if remediated, highlights potential vulnerabilities in the company's financial reporting processes that require ongoing vigilance.

Industry Context

StockSavvy.ai notes that changes in independent registered public accounting firms are common, often driven by factors such as fee negotiations, service scope, or a desire for fresh perspectives. The transition from a 'Big Four' firm like EY to another 'Big Four' firm like KPMG typically indicates a continuation of high-standard audit practices within the industry, especially when no disagreements were reported.

Comparison to Industry Standards

• The change of auditors from Ernst & Young LLP to KPMG LLP aligns with common corporate governance practices where companies periodically review and, if deemed beneficial, change their audit firm. This practice is observed across various industries, including financial technology, to ensure audit independence and fresh perspectives.
• The absence of disagreements with the former auditor, Ernst & Young LLP, regarding accounting principles or audit scope is a positive indicator, contrasting with situations where auditor changes might signal underlying financial reporting issues, as seen in some high-profile corporate scandals.

Corporate Governance

Stakeholder Impact

• Shareholders: May view the remediation of the material weakness and the orderly transition to a new, reputable auditor as a positive step for financial reporting reliability and corporate governance.
• Regulatory Authorities: The SEC will review the 8-K filing and Ernst & Young LLP's accompanying letter to ensure compliance with reporting requirements regarding auditor changes and the disclosure of any disagreements or reportable events.

Next Steps

• KPMG LLP will serve as the new independent registered public accounting firm for Priority Technology Holdings, Inc.
• Ernst & Young LLP has been authorized by the company to respond fully to KPMG's inquiries concerning the previously reported material weakness.
• Ernst & Young LLP has furnished a letter to the SEC, attached as Exhibit 16.1, stating its agreement with the company's disclosures regarding the auditor change.

Key Dates

Keywords

Priority Technology Holdings, PRTH, auditor change, Ernst & Young, KPMG, independent registered public accounting firm, material weakness, internal control over financial reporting, corporate governance, SEC filing, 8-K