Item 4.01 Changes in Registrant’s Certifying Accountant.
On August 5, 2022, the Audit Committee of the Board of Directors (the “Audit Committee”) of Legacy Housing Corporation (the “Company”) dismissed Weaver and Tidwell, LLP (“Weaver”) as the independent registered public accounting firm of the Company, effective immediately. On August 5, 2022, the Audit Committee approved the appointment of Daszkal Bolton LLP (“Daszkal”) as the Company’s new independent registered public accounting firm.
Prior to the engagement of Daszkal, neither the Company nor anyone on its behalf consulted Daszkal regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event,” each as defined in Regulation S-K Item 304(a)(1)(iv) and 304(a)(1)(v), respectively.
The report of Weaver on the Company’s financial statements for the year ended December 31, 2021 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles.
During the year ended December 31, 2021 and the subsequent interim period through August 5, 2022, there were no (i) disagreements, as defined in Item 304(a)(1)(iv) of Regulation S-K, with Weaver on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to Weaver’s satisfaction, would have caused Weaver to make reference thereto in its report or (ii) reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K, except as noted below.
During the audit for the year ended December 31, 2021, material weaknesses were identified in our internal control over financial reporting, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. The material weaknesses were due to insufficient (i) accounting systems and procedures in place, particularly in the areas of revenue recognition; processing of accounts payable; prepaid expenses; and inventory costing and management; (ii) systems and processes to support timely preparation of financial statements for compliance with U.S. GAAP and SEC; (iii) policies and procedures to ensure the appropriate review and approval of user access rights to our accounting system; and lack of approval of journal entries and segregation of duties in our financial reporting process; and (iv) safeguards in our information technology infrastructure required by the COBIT framework. Weaver has discussed these matters with the Audit Committee, and the Company has authorized Weaver to fully respond to any inquiries by Daszkal concerning these matters.
The Company provided Weaver with a copy of the disclosures it is making in this Current Report on Form 8-K and requested that Weaver furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements contained herein. A copy of Weaver’s letter, dated August 9, 2022, is filed as Exhibit 16.1 to this Current Report on Form 8-K.
The Audit Committee took competitive bids for the 2022 audit and elected to award the engagement to Daszkal Bolton LLP.
