Item 4.01Changes in Registrant’s Certifying Accountant.
Explanatory Note
This Current Report on Form 8-K is being filed by Delmar Bancorp (“Delmar”) to satisfy Question 101.01 of the Securities and Exchange Commission’s (the “SEC”) Exchange Act Form 8-K Compliance and Disclosure Interpretations, which states that all Item 4.01 events must be reported on a Current Report on Form 8-K. The information provided in this Item 4.01 was previously disclosed in Part II, Item 9B, “Other Information” in Delmar’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 27, 2020.
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The Audit & Compliance Committee of Delmar’s Board of Directors conducted a competitive process to determine Delmar’s independent registered public accounting firm for the fiscal year ending December 31, 2020.
The Audit & Compliance Committee invited several independent registered public accounting firms to participate in this process, including TGM Group LLC (“TGM”), which audited Delmar’s financial statements for the fiscal years ended December 31, 2019 and December 31, 2018.
Dismissal of Independent Registered Public Accounting Firm. On March 4, 2020, the Audit & Compliance Committee approved the dismissal of TGM as Delmar’s independent registered public accounting firm, which was effective upon the filing of Delmar’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. TGM was notified of the dismissal on March 5, 2020.
The audit reports of TGM on Delmar’s consolidated financial statements for the fiscal years ended December 31, 2019 and 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2019 and 2018 and the subsequent interim period through the date of Delmar’s dismissal of TGM, there have been no “disagreements” (within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between Delmar and TGM on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of TGM would have caused TGM to make reference thereto in its reports on the consolidated financial statements for such years; and there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S- K).
Delmar provided TGM with a copy of the disclosure it is making herein in response to Item 304(a) of Regulation S-K prior to filing this report, and requested that TGM furnish Delmar with a copy of its letter addressed to the SEC, pursuant to Item 304(a)(3) of Regulation S-K, stating whether or not TGM agrees with the statements related to TGM made by Delmar in this Current Report on Form 8-K under the caption “Dismissal of Independent Registered Public Accounting Firm.” A copy of TGM’s letter to the SEC dated August 12, 2020 is attached as Exhibit 16.1 to this report.
Engagement of Independent Registered Public Accounting Firm. On March 4, 2020, the Audit & Compliance Committee approved the appointment of Yount, Hyde & Barbour P.C. (“YHB”) as Delmar’s new independent registered public accounting firm to perform independent audit services for the fiscal year ending December 31, 2020, which was subject to completion of YHB’s standard client acceptance procedures and execution of an engagement letter. YHB was notified of the engagement on March 5, 2020.
During the fiscal years ended December 31, 2019 and 2018 and the subsequent interim period through the date of its engagement of YHB, neither Delmar, nor anyone acting on its behalf, consulted YHB 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 with respect to the consolidated financial statements of Delmar, and no written report or oral advice was provided to Delmar by YHB that was an important factor considered by Delmar in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (within
