Funko, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Funko, Inc. on April 11, 2024. The filing addresses a change in the Company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on corporate governance and audit matters.
Material Changes
- Accountant Change: The Audit Committee approved the engagement of PricewaterhouseCoopers LLP (PwC) as the new independent registered public accounting firm, effective upon the filing of the Form 10-Q for the quarter ended March 31, 2024.
- Dismissal of Prior Auditor: Ernst & Young LLP (EY) was dismissed as the independent registered public accounting firm, effective upon the same 10-Q filing.
- Audit Opinions: EY's reports for the fiscal years ended December 31, 2022, and 2023 contained adverse opinions regarding the effectiveness of internal control over financial reporting.
Outlook, Risks, and Contingencies
The filing details significant material weaknesses in internal controls that led to the adverse opinions from EY. These weaknesses include:
- Failure to design and implement control activities addressing relevant risks and retaining sufficient evidence of performance.
- Failure to design and operate general information technology controls (GITCs) related to change management, user access, and segregation of duties within US Enterprise Resource Planning software and systems for the digital collectibles business.
- Failure to design and implement monitoring activities to ascertain if internal control components are functioning.
- For 2022, additional weaknesses included failures in risk assessment and information/communication activities.
The Company has authorized EY to respond to inquiries from PwC regarding these material weaknesses. No disagreements or reportable events occurred between the Company and EY other than the disclosed material weaknesses.
Investor Verification Checklist
- Verify the effective date of the PwC engagement and EY dismissal in the upcoming Form 10-Q for the quarter ended March 31, 2024.
- Review the amended Form 8-K expected to be filed after the 10-Q for updated interim period disclosures.
- Examine the letter from EY (Exhibit 16.1) to confirm their agreement with the statements regarding the dismissal and lack of disagreements.
- Monitor future filings for progress reports on remediation of the material weaknesses in internal controls over financial reporting.