Item 4.01 Changes in Registrant's Certifying Accountant
(a) Dismissal of Previous Independent Registered Public Accounting Firm.
The Company filed its Annual Report on Form 10-K for the year ended September
30, 2021 with the SEC on November 29, 2021. Effective upon such filing, KPMG's
audit of the Company's consolidated financial statements for the year ended
September 30, 2021 and the effectiveness of the Company's internal control over
financial reporting as of September 30, 2021 were completed and its dismissal as
the Company's independent registered public accounting firm became effective.
The audit reports of KPMG on the consolidated financial statements as of and for
the years ended September 30, 2021 and 2020 did not contain an adverse opinion
or disclaimer of opinion nor were they qualified or modified as to uncertainty,
audit scope or accounting principles, except that KPMG's report dated November
30, 2020 contained the below separate paragraph:
· As discussed in Note 1 of the consolidated financial statements, the Company
has changed its method of accounting for leases as of October 1, 2019 due to
the adoption of ASU No. 2016-02, Leases (ASC Topic 842) and method of
accounting for revenue contracts with customers as of October 1, 2018 due to
the adoption of ASU No. 2014-09, Revenue with Contracts with Customers (ASC
Topic 606).
The audit reports of KPMG on the effectiveness of internal control over
financial reporting as of September 30, 2021 and 2020 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles, except that KPMG's report
dated November 29, 2021 indicates that:
· The Company did not maintain effective internal control over financial
reporting as of September 30, 2021 because of the effect of a material
weakness on the achievement of the objectives of the control criteria and
contains an explanatory paragraph that states that a material weakness related
to an ineffective risk assessment process resulted in the ineffective design
of certain controls over revenue recognition, and the accumulation of
inventory costs and the determination of inventory carrying values at a
reporting unit has been identified.
· The Company acquired I.S.A. - Altanova Group ("Altanova") on July 29, 2021,
and the assets of Phenix Technologies ("Phenix") on August 9, 2021, and
management excluded from its assessment of the effectiveness of the Company's
internal control over financial reporting as of September 30, 2021, Altanova's
and Phenix's internal control over financial reporting associated with total
assets representing 12.2 percent of consolidated assets, and total sales
representing 0.6 percent of consolidated net sales, included in the
consolidated financial statements of ESCO Technologies Inc. and subsidiaries
as of and for the year ended September 30, 2021. KPMG's audit of internal
control over financial reporting of the Company also excluded an evaluation of
the internal control over financial reporting of Altanova and Phenix.
During the two fiscal years ended September 30, 2021, and the subsequent interim
period through November 29, 2021, there were (i) no disagreements between the
Company and KPMG within the meaning of Item 304(a)(1)(iv) of Regulation S-K and
the related instructions on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to KPMG's satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its report; and (ii) no
"reportable events" within the meaning of Item 304(a)(1)(v) of Regulation S-K
with the exception of the material weakness described above.
The Company provided KPMG with a copy of the disclosures it is making in this
Form 8-K/A and requested that KPMG furnish a letter addressed to the SEC stating
whether or not it agrees with the statements made herein. A copy of KPMG's
letter, dated December 3, 2021, is filed as Exhibit 16.1 to this Form 8-K/A.
(b) Appointment of New Independent Registered Public Accounting Firm.
During the two fiscal years ended September 30, 2021, and the subsequent interim
period through November 29, 2021 neither the Company nor anyone acting on its
behalf consulted with Grant Thornton with respect to either (i) the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
consolidated financial statements of the Company and its subsidiaries, and no
written report or oral advice was provided by Grant Thornton to the Company that
Grant Thornton concluded was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial reporting issue,
or (ii) any matter that was the subject of either a disagreement (as defined in
Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in
Item 304(a)(1)(v) of Regulation S-K).
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description of Exhibit
16.1 Letter from KPMG LLP
104 Cover Page Inline Interactive Data File
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