An auditor change draws instant attention from the SEC and the market. This tool builds the Item 4.01 disclosure, walks the disagreements and reportable-events analysis, and checks the Exhibit 16 letter.
What this tool does
It structures the required Item 4.01 content — dismissal vs resignation, prior opinions and modifications, disagreements, reportable events — and the former auditor's Exhibit 16 letter requirement.
Who it's for
Controllers and GCs at companies dismissing or changing their audit firm.
How to use it — step by step
- State the change. Dismissed or resigned; the effective date and the decision-maker (board/audit committee).
- Work the disclosure items. Prior two years' opinions, any modifications, disagreements, reportable events.
- Handle the Exhibit 16 letter. The former auditor must state whether they agree with your disclosure.
- File within four business days. Confirm the final language with counsel first.
How to read your result
The sensitive lines are 'disagreements' and 'reportable events' — most changes have none, but you must say so explicitly, and the former auditor gets to respond.
Worked examples
The same tool behaves differently depending on what you put in. Here are 3 situations.
Routine dismissal, no disagreements
Inputs: Board approved a switch; clean prior opinions.
What the tool shows: Produces the standard 4.01 with 'no disagreements / no reportable events' language and the Exhibit 16 requirement.
What to do: File the 8-K; attach the auditor's Exhibit 16 letter as an amendment if needed.
Auditor resigned
Inputs: The firm initiated the exit.
What the tool shows: Flags the different framing for a resignation and the same disagreements/reportable-events analysis.
What to do: Be precise about who initiated and why.
Prior report had a going-concern paragraph
Inputs: Modified opinion in the prior year.
What the tool shows: Requires you to disclose the modification — a common miss.
What to do: Disclose the going-concern modification explicitly.
Common questions
What's the deadline? Item 4.01 is due within four business days of the change.
What is Exhibit 16? A letter from the former auditor stating whether they agree with your 8-K disclosure.
Does this replace counsel? No — auditor-change language is high-scrutiny; verify with SEC counsel.