8-KFinancial EventsExhibits & Filings

CMS ENERGY CORP 8-K Report, Auditor Change (Dec 5, 2006)

Filed December 5, 2006For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

This 8-K filing by CMS Energy Corporation (CMS) on December 5, 2006, primarily announces a change in their independent registered public accounting firm. Effective November 30, 2006, CMS Energy and its subsidiary Consumers Energy Company dismissed Ernst & Young LLP and appointed PricewaterhouseCoopers LLP (PWC) as their new auditors, subject to client acceptance procedures. While the change was part of a competitive bidding process and not due to any disagreements on accounting principles or financial statement disclosures, the filing does mention a previously disclosed material weakness in CMS Energy's internal controls over financial reporting related to income tax accounting. Ernst & Young will continue to audit the financial statements for the fiscal year ending December 31, 2006, with PWC taking over for the fiscal year ending December 31, 2007. Investors should note that this auditor change, particularly in conjunction with the existing material weakness, may warrant further scrutiny of the company's financial reporting processes.

Key Highlights

  • 1CMS Energy Corporation and Consumers Energy Company dismissed Ernst & Young LLP as their independent registered public accounting firm on November 30, 2006.
  • 2The dismissal of Ernst & Young was recommended and approved by the Audit Committees of both CMS Energy and Consumers.
  • 3The change in auditors resulted from a competitive bidding process conducted in the ordinary course of business.
  • 4There were no disagreements with Ernst & Young regarding accounting principles, financial statement disclosure, or auditing procedures in the past two fiscal years and the subsequent interim period.
  • 5A previously disclosed material weakness concerning internal controls over financial reporting for income tax accounting at CMS Energy is mentioned.
  • 6PricewaterhouseCoopers LLP (PWC) has been appointed as the new independent registered public accounting firm, effective for the fiscal year ending December 31, 2007.
  • 7Ernst & Young will continue to serve as the auditor for the fiscal year ending December 31, 2006, as well as for the Employees' Savings Plan and Employee Stock Ownership Plan.

Frequently Asked Questions

CMS Energy and Consumers Energy Company changed their independent auditor as a result of a competitive bidding process conducted in the ordinary course of business. The decision was recommended and approved by the Audit Committees of both companies' Boards of Directors.

No, the filing states there were no disagreements with Ernst & Young on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures during the two most recent fiscal years (ended December 31, 2005 and 2004) and the subsequent interim period through November 30, 2006.

The filing notes that a material weakness related to internal controls over financial reporting for income tax accounting at CMS Energy was previously disclosed. However, this material weakness is not cited as a reason for the auditor change, nor did it lead to any disagreements with Ernst & Young. Ernst & Young will continue to audit the financial statements for the year ending December 31, 2006.

PricewaterhouseCoopers LLP (PWC) has been appointed as the new independent registered public accounting firm. PWC's appointment is subject to the completion of client acceptance procedures and the execution of a formal engagement letter. They will begin auditing for the fiscal year ending December 31, 2007.