Business Context and Reporting Period
Company: Hope Bancorp, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 31, 2017 (Event Date: May 25, 2017)
Context: The filing discloses a change in the Company's independent registered public accounting firm following a competitive request for proposal process by the Audit Committee.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on the administrative change of the external auditor.
Material Changes
- Accountant Change: The Company engaged Crowe Horwath LLP effective May 25, 2017, for the fiscal year ending December 31, 2017.
- Dismissal of Prior Firm: BDO USA, LLP was dismissed as the independent registered public accounting firm.
- Reason for Change: The change was not due to dissatisfaction with the quality of professional services rendered by BDO. It was a result of a competitive selection process approved unanimously by the Board of Directors.
- Audit Opinions: BDO's audit reports for 2015 and 2016 did not contain adverse opinions on financial statements. However, BDO issued an adverse audit report on the effectiveness of internal control over financial reporting as of December 31, 2016, due to material weaknesses.
Guidance, Outlook, and Risks
- Internal Control Risks: The filing confirms the existence of material weaknesses in internal control over financial reporting as of December 31, 2016, which were the subject of the adverse opinion by the prior auditor.
- Disagreements: There were no disagreements between the Company and BDO regarding accounting principles, practices, or auditing scope during the fiscal years ended December 31, 2015 and 2016, or through May 25, 2017.
- Consultations: The Company did not consult with the new auditor, Crowe Horwath, regarding accounting principles or potential audit opinions prior to the engagement.
Investor Verification Checklist
- Verify the specific nature of the material weaknesses in internal controls identified by BDO as of December 31, 2016.
- Review the Company's remediation plan for the identified internal control weaknesses.
- Confirm the transition timeline and scope of the new auditor, Crowe Horwath LLP, for the 2017 fiscal year.
- Examine the attached letter from BDO (Exhibit 16.1) to ensure the prior auditor agrees with the Company's statements regarding the change.