Summary
Brown & Brown, Inc. (BRO) filed an 8-K on June 19, 2002, to announce a significant change in its independent public accountants. The company's Board of Directors, based on the recommendation of its Audit Committee, decided to dismiss Arthur Andersen LLP (Andersen) and engage Deloitte & Touche, LLP (Deloitte) as its new independent auditor for both the company and its Employees' Savings Plan and Trust for the year 2002. This change comes at a critical time, given the ongoing scrutiny of Arthur Andersen.
Key Highlights
- 1Brown & Brown, Inc. has changed its independent auditor, switching from Arthur Andersen LLP to Deloitte & Touche, LLP.
- 2The decision was made by the Board of Directors upon recommendation from the Audit Committee.
- 3The change is effective for the company and its Employees' Savings Plan and Trust for the 2002 fiscal year.
- 4There were no reported disagreements with Arthur Andersen on accounting principles, financial statement disclosures, or auditing procedures.
- 5Arthur Andersen has confirmed in writing that they found no basis for disagreement with Brown & Brown's statements regarding the auditor change.
- 6Brown & Brown had not consulted Deloitte & Touche on any significant accounting or auditing matters prior to this engagement.
- 7This transition is a standard procedural update filed via an 8-K, but notable given the auditor landscape at the time.
Frequently Asked Questions
Brown & Brown's Board of Directors, acting on the Audit Committee's recommendation, decided to change its independent auditor from Arthur Andersen LLP to Deloitte & Touche, LLP. This decision is a routine annual consideration, but the timing is noteworthy given the external circumstances surrounding Arthur Andersen.
No, the filing explicitly states that there were no disagreements with Arthur Andersen on any matters of accounting principles, practices, financial statement disclosure, or auditing scope or procedure during the company's and plan's two most recent fiscal years or through the date of the filing. Arthur Andersen also provided a letter stating they found no basis for disagreement.
According to the filing, Brown & Brown had not consulted Deloitte & Touche on any accounting principles, specific transactions, or auditing opinions prior to this engagement. Deloitte's advice was not a significant factor in any accounting or reporting decisions made by the company.
The change in auditor, while stated as routine, is significant because it signals Brown & Brown's proactive approach to auditor independence and oversight. Investors often view a change away from a Big Five firm (like Arthur Andersen was at the time) towards another reputable firm like Deloitte as a sign of good corporate governance, especially in light of the significant accounting scandals affecting Arthur Andersen around 2002.