Business Context and Reporting Period
This Form 8-K is a current report filed by Hunt Companies Finance Trust, Inc. (Note: The input metadata lists "Lument Finance Trust, Inc.", but the filing text identifies the registrant as "Hunt Companies Finance Trust, Inc."). The report date is April 19, 2019, covering events related to the dismissal of the previous auditor and the appointment of a new independent registered public accounting firm.
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 corporate governance regarding the external audit function.
Material Changes
- Dismissal of Auditor: The Audit Committee approved the dismissal of Grant Thornton LLP as the independent registered public accounting firm, effective upon the completion of services for the fiscal quarter ended March 31, 2019.
- Appointment of New Auditor: The Audit Committee approved the appointment of KPMG LLP as the new independent registered public accounting firm for the fiscal year ending December 31, 2019. Engagement began on April 22, 2019.
- Reason for Change: The change resulted from a comprehensive, competitive request for proposal process.
Management Commentary, Risks, and Contingencies
Adverse Opinion on Internal Controls: Grant Thornton's report on internal control over financial reporting as of December 31, 2018, expressed an adverse opinion due to material weaknesses. These weaknesses included:
- Lack of appropriate resources and supervision of third-party specialists (specifically tax advisors).
- Lack of detail in management documentation regarding the execution of management review controls.
- Critical timely review of account balances to determine appropriate accounting treatment.
Financial Statement Opinions: Grant Thornton's reports on the consolidated financial statements for fiscal years 2018 and 2017 did not contain adverse opinions, disclaimers, or qualifications regarding uncertainty, audit scope, or accounting principles.
Disagreements: There were no disagreements with Grant Thornton on accounting principles, practices, or auditing scope/procedures that would have required reference in their report. No reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K occurred.
Consultation with New Auditor: The company did not consult with KPMG regarding accounting principles, audit opinions, or reportable events during the period from January 1, 2017, through April 19, 2019.
Important Facts for Investor Verification
- Verify the specific remediation plans management has implemented to address the material weaknesses in internal controls that led to the adverse opinion from Grant Thornton.
- Confirm the timeline for KPMG's initial review of the financial statements for the quarter ended June 30, 2019.
- Review the attached Exhibit 16.1 (Letter from Grant Thornton) to ensure no undisclosed disagreements exist.
- Monitor future filings (10-Q/10-K) to assess whether the change in auditor correlates with any restatements or changes in financial reporting practices.