Business Context and Reporting Period
This Form 8-K Current Report was filed by Camping World Holdings, Inc. on May 18, 2018. The filing addresses a significant corporate governance event: the change of the company's independent registered public accounting firm.
Key Financial Metrics
This filing does not contain revenue, profit, cash flow, margin, debt, or liquidity figures. It is a disclosure regarding auditor engagement and internal control history rather than a financial performance report.
Material Changes
- Accountant Change: The Audit Committee dismissed Ernst & Young LLP (E&Y) effective May 18, 2018, and engaged Deloitte & Touche LLP (Deloitte) as the new independent registered public accounting firm for the fiscal year ending December 31, 2018.
- Audit History: E&Y's reports for fiscal years 2016 and 2017 did not contain adverse opinions on the financial statements themselves. However, E&Y issued an adverse opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2017.
- Disagreements: The company reported no "disagreements" with E&Y regarding accounting principles, practices, or audit scope during the relevant periods.
Outlook, Risks, and Contingencies
The filing highlights specific material weaknesses in internal controls that led to the adverse opinion in the prior year. These weaknesses included:
- Insufficient analysis regarding the realization of deferred tax assets related to the direct investment in CWGS Enterprises, LLC.
- Insufficient documentation and execution of accounting policies within FreedomRoads Holding Company, LLC (RV dealerships).
- Ineffective transaction-level and management review controls over the valuation of trade-in unit inventory.
- The Audit Committee has authorized E&Y to discuss these weaknesses with Deloitte.
Investor Verification Checklist
- Verify the transition plan and timeline for Deloitte to address the previously identified material weaknesses in internal controls.
- Review the 2017 Form 10-K for detailed descriptions of the internal control failures related to deferred tax assets and inventory valuation.
- Confirm whether the change in auditors was driven by the internal control issues or other undisclosed factors, noting the absence of reported disagreements.
- Monitor future filings for updates on the remediation of the internal control deficiencies.