Business Context and Reporting Period
This Form 6-K filing by SOS Limited (SOS Ltd) covers the month of October 2020. The report details a change in the Company's independent registered public accounting firm, effective October 11, 2020.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on corporate governance and audit matters.
Material Changes
- Dismissal of Previous Auditor: Shandong Haoxin Certified Public Accountants Co., Ltd. ("Haoxin") was dismissed as the independent registered public accounting firm.
- Engagement of New Auditor: Audit Alliance LLP was engaged to audit the consolidated financial statements for the fiscal years ended December 31, 2020, and 2019.
- Audit Opinion History: Haoxin's reports for the past two fiscal years did not contain adverse or disclaimer opinions but included an explanatory paragraph regarding the Company's ability to continue as a going concern.
Outlook, Risks, and Contingencies
The filing discloses significant risks related to internal controls over financial reporting, identified as "reportable events" during the tenure of the previous auditor. Material weaknesses include:
- Lack of accounting staff with appropriate knowledge of U.S. GAAP and SEC reporting requirements.
- Insufficient documented financial closing policies, specifically regarding period-end expense cut-off and accruals.
- Inadequate controls for documenting and evaluating significant and non-routine payment transactions.
- Lack of procedures to prevent the use of personal bank accounts for company operations.
- Inadequate documentation controls for nonrecurring transactions.
There were no disagreements between the Company and Haoxin regarding accounting principles or auditing scope prior to the dismissal.
Investor Verification Checklist
- Verify the status of the "going concern" explanatory paragraph in the most recent audited financial statements.
- Confirm the remediation plan for the five identified material weaknesses in internal controls.
- Review the letter from the former auditor (Haoxin) filed as Exhibit 99.1 to ensure no undisclosed disagreements exist.
- Assess the timeline for Audit Alliance LLP to complete the audit for the 2019 and 2020 fiscal years.