Business Context and Reporting Period
This Form 8-K is filed by Kohlberg Capital Corporation (noted as BCP Investment Corp in metadata) on January 12, 2010. The report discloses a material change in the company's certifying accountant. The registrant is a Delaware corporation operating as a business development company.
Key Financial Metrics
The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document focuses exclusively on the termination of the relationship with the independent public accounting firm.
Material Changes Versus Prior Period
- Accountant Dismissal: On January 12, 2010, the Company dismissed Deloitte & Touche LLP as its registered public accounting firm.
- Reason for Dismissal: The dismissal followed Deloitte's notification on January 5, 2010, that it was no longer independent with respect to the Company. This conclusion arose from discussions regarding the Investment Company Act of 1940 and specific disagreements over valuation methodologies.
- Reliance on Past Reports: Deloitte advised on December 10, 2009, that its audit report for the fiscal year ended December 31, 2008, and interim reviews for periods ended March 31, 2009, and June 30, 2009, should no longer be relied upon.
- Nature of Disagreement: The disagreement concerned the appropriateness of the methodology and procedures used by the Company under ASC 820 (SFAS 157) to value investments. Deloitte indicated this might constitute a material weakness in internal controls over valuation.
- 2007 Audit Status: Deloitte's report for the fiscal year ended December 31, 2007, remained unqualified and contained no adverse opinions or disagreements.
Guidance, Outlook, and Risks
- Internal Controls Risk: Deloitte advised that the valuation disagreements might have resulted in a conclusion of a material weakness in the Company's internal controls over investment valuation.
- Regulatory Compliance: The dismissal was approved by the Board of Directors and the Audit Committee following discussions with the SEC staff regarding the selection and termination of accountants for business development companies.
- Successor Auditor: The Company has authorized Deloitte to respond fully to inquiries from the successor accountants regarding the disagreements.
- Future Filings: A letter from Deloitte responding to the Company's statements will be filed as an exhibit to an amended Form 8-K/A once received.
Investor Verification Checklist
- Verify the identity and qualifications of the successor independent public accounting firm to be appointed.
- Review the upcoming amended Form 8-K/A for Deloitte's formal response to the Company's disclosure.
- Assess the impact of the withdrawal of reliance on the 2008 annual and 2009 interim financial statements on current investment valuations.
- Monitor for any restatements of financial results related to the SFAS 157 valuation methodology disagreements.
- Confirm the status of the Company's internal controls over financial reporting following the identified potential material weakness.