Business Context and Reporting Period
This Form 8-K filing by Delta Air Lines, Inc. reports a corporate governance event dated January 30, 2006. The filing details the decision by the Audit Committee to change the company's independent registered public accounting firm for the fiscal year ending December 31, 2006.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the administrative change of auditors.
Material Changes
- Change in Auditor: Delta Air Lines, Inc. has selected Ernst & Young LLP to replace Deloitte & Touche LLP as its independent registered public accounting firm.
- Selection Process: The decision followed a competitive bid process involving proposals from large accounting firms.
- Regulatory Condition: The engagement of Ernst & Young is subject to approval by the United States Bankruptcy Court for the Southern District of New York.
Outlook, Risks, and Contingencies
Historical Audit Context: Deloitte & Touche's reports for the years ended December 31, 2004, and 2003 did not contain adverse opinions but included explanatory paragraphs regarding:
- The ability of Delta to continue as a going concern.
- A change in the method of accounting for goodwill and other intangible assets effective January 1, 2002 (conforming to SFAS No. 142).
Disagreements: The filing states there were no disagreements between Delta and Deloitte & Touche regarding accounting principles, financial statement disclosure, or auditing scope/procedures for the fiscal years 2003 and 2004 through the date of this report.
Consultations: Delta confirmed it did not consult Ernst & Young regarding accounting principles or reportable events prior to the engagement.
Investor Verification Checklist
- Verify the status of the United States Bankruptcy Court approval for the new auditor engagement.
- Review the Exhibit 16 letter from Deloitte & Touche to confirm their agreement with the company's statements regarding the lack of disagreements.
- Monitor the upcoming Form 10-K for the fiscal year ended December 31, 2005, which has not yet been issued, to see the final audit opinion from Deloitte & Touche.
- Assess the implications of the historical "going concern" explanatory paragraph in the context of the company's current bankruptcy proceedings.