Business Context and Reporting Period
This Form 8-K Current Report was filed by Take-Two Interactive Software, Inc. on April 4, 2006. The report discloses a change in the company's 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 and audit matters.
Material Changes
- Dismissal of Auditor: The Audit Committee dismissed PricewaterhouseCoopers LLP (PWC) as the independent registered public accounting firm effective April 4, 2006.
- Appointment of New Auditor: The Audit Committee appointed Ernst & Young LLP (E&Y) as the new independent registered public accounting firm on the same date.
- Audit Disagreements: The company reported no disagreements with PWC regarding accounting principles, practices, financial statement disclosure, or auditing scope during the fiscal years ended October 31, 2005 and 2004, or through April 4, 2006.
- Reportable Events: PWC's reports for the fiscal years ended October 31, 2005 and 2004 did not contain adverse opinions, disclaimers, or qualifications.
Guidance, Risks, and Contingencies
The filing discloses specific material weaknesses in internal control over financial reporting identified as of October 31, 2005, which were previously disclosed in the company's Form 10-K:
- Accounts Payable Controls: Ineffective controls over the existence and valuation of accounts payable related to inventory purchases. Specifically, the company lacked controls to identify, analyze, and reconcile inventory purchase amounts to supporting documentation.
- Amortization Controls: Ineffective controls over the accuracy of the amortization of capitalized software development costs. The company lacked controls to accurately prepare and review inputs for the spreadsheet application used to calculate amortization expense.
No new guidance or outlook was provided in this filing.
Investor Verification Checklist
- Verify the transition timeline and scope of work between PWC and E&Y.
- Review the company's remediation plan for the disclosed material weaknesses in accounts payable and software amortization controls.
- Examine the attached letter from PWC (Exhibit 16.1) for any additional context regarding the dismissal.
- Monitor future filings for the impact of the new auditor on the upcoming fiscal year audit opinion.