Business Context and Reporting Period
This Form 8-K was filed by Faraday Future Intelligent Electric Inc. on August 23, 2022. The report discloses a material change in the Company's independent registered public accounting firm. The Company is an emerging growth company incorporated in Delaware.
Financial Metrics
This filing does not contain specific financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity figures. The document focuses exclusively on the departure of the auditor and historical audit qualifications.
Material Changes
Change in Certifying Accountant: On August 23, 2022, PricewaterhouseCoopers LLP (PwC) notified the Company that it will not stand for re-election as the independent registered public accounting firm for the fiscal year ending December 31, 2022. PwC is no longer the Company's auditor effective immediately.
Audit History: PwC's audit reports for fiscal years 2020 and 2021 contained no adverse opinions or disclaimers but included an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.
Reportable Events: There were no disagreements between the Company and PwC regarding accounting principles or auditing scope. However, the filing reiterates previously disclosed material weaknesses in internal controls reported in filings from Q3 2021 through Q2 2022.
Outlook, Risks, and Contingencies
Internal Control Deficiencies: The filing details significant material weaknesses that contributed to the audit environment, including:
- Lack of sufficient accounting professionals with appropriate knowledge and experience.
- Ineffective control environment and insufficient segregation of duties.
- Failure to maintain effective controls for complex transactions (e.g., embedded derivatives, related party notes, failed sale leasebacks).
- Inadequate IT general controls regarding program changes, user access, and data backups.
- Failure to maintain effective controls over the identification and disclosure of related party transactions.
Management Action: The Company is currently in discussions with multiple accounting firms to engage a new independent registered public accounting firm for the 2022 fiscal year as promptly as practicable.
Key Facts for Investor Verification
- Verify the identity and engagement status of the new independent registered public accounting firm.
- Review the Company's most recent 10-Q or 10-K filings to assess the current status of the "going concern" qualification.
- Examine the Company's progress in remediating the specific material weaknesses in internal controls listed in this filing.
- Confirm whether the lack of an auditor impacts the Company's ability to file future periodic reports on time.