Item 4.01 Change in Registrant's Certifying Accountant.
On June 3, 2021, the Audit Committee of the Board of Directors of Spark Networks
SE (the "Company") approved the dismissal of KPMG AG
Wirtschaftsprüfungsgesellschaft ("KPMG") as the Company's independent registered
public accounting firm, effective on June 3, 2021, and approved the appointment
of BDO USA, LLP ("BDO") as the Company's new independent registered public
accounting firm, subject to approval by the Company's shareholders at the
Company's 2021 annual meeting of shareholders.
During the Company's two most recent fiscal years ended December 31, 2020 and
2019, and the subsequent interim period through June 3, 2021, there were no
disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the
related instructions) between the Company and KPMG on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to KPMG's satisfaction, would have caused KPMG
to make reference to the subject matter of the disagreement in connection with
their reports on the Company's consolidated financial statements for 2020 and
2019.
During the two most recent fiscal years ended December 31, 2020 and 2019, and
the subsequent interim period through June 3, 2021, there were no "reportable
events" (as defined in Item 304(a)(1)(v) of Regulation S-K), except the
existence of material weaknesses reported in Item 9A of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 filed on March
31, 2021 summarized as follows:
•The Company did not adequately design certain key controls at a sufficient
level of precision, including account reconciliation and debt controls, to
address relevant financial reporting risks including inadequate design of
procedures to ensure completeness and accuracy of underlying reports and data
used when executing the control.
•The Company did not design and maintain formal and effective controls over
certain information technology general controls ("ITGCs") for IT systems that
are relevant to the preparation of the financial statements.
•The Company did not design and maintain adequate controls to analyze and
account for Value Added Tax (VAT) and sales tax obligations, to address relevant
financial reporting risks over timely payment and accrual recognition which
could adversely affect the completeness and accuracy of related balances.
•The Company did not have an adequate number of individuals within its
accounting and financial reporting function with sufficient training in US GAAP
and SEC reporting standards, including understanding of new accounting standards
and accounting for significant estimates including goodwill, and the impact on
the Company's internal controls over financial reporting.
•The Company utilized third party specialists in connection with the valuation
of the underlying assets acquired and liabilities assumed in the Spark Networks
/ Zoosk Merger, accounting for its United States income tax provision, and in
the annual impairment test performed over the Company's goodwill and
indefinite-lived intangible assets. The Company did not have a sufficient number
of adequately trained personnel within the organization to provide appropriate
oversight over these specialists, to sufficiently understand the complexities of
the related estimates, or to sufficiently review certain assumptions and
calculations performed by these specialists.
The audit reports of KPMG on the Company's consolidated financial statements for
each of the two most recent fiscal years ended December 31, 2020 and 2019 did
not contain an adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
The Company provided KPMG with a copy of the disclosures it is making in this
Current Report on Form 8-K and requested that KPMG furnish the Company with a
letter addressed to the Securities and Exchange Commission stating whether they
agree with the above statements. A copy of the letter is filed as Exhibit 16.1
to this Current Report on Form 8-K.
During the Company's two most recent fiscal years ended December 31, 2020 and
2019, and the subsequent interim period through June 3, 2021, neither the
Company nor anyone on its behalf has previously consulted with BDO regarding
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 Company's consolidated financial statements, and BDO did not
provide either a written report or oral advice to the Company that BDO concluded
was an important factor considered by the Company in reaching a decision as to
any accounting, auditing, or financial reporting issue; or (ii) any matter that
was either the subject of a "disagreement" or a "reportable event" (as defined
in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K, respectively).
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is filed as part of this Current Report on Form 8-K:
Exhibit No. Description
16.1 Letter from KPMG dated June 8 , 2021
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