Why is Canadian Pacific changing its auditor?

Canadian Pacific requested Deloitte LLP to resign as its independent registered public accounting firm as part of a review process. This change is occurring in the context of the company's pending acquisition of Kansas City Southern (KCS), a major corporate event.

Is this change of auditor related to any problems with Deloitte?

No, the filing states that there were no disagreements with Deloitte on any matters of accounting principles, financial statement disclosure, or auditing scope or procedure. Deloitte's audit reports for the fiscal years 2020 and 2019 did not contain any adverse opinions or disclaimers, nor were they qualified. Deloitte's resignation is effective upon completion of the fiscal year 2021 audit.

Who is the new auditor and what is their role?

Ernst & Young LLP (EY) has been engaged as Canadian Pacific's new independent registered public accounting firm for the fiscal year ending December 31, 2022. This engagement is subject to EY's standard client acceptance process.

Has Canadian Pacific consulted with EY before this engagement?

According to the filing, Canadian Pacific has not consulted with EY on any matters involving accounting principles or audit opinions prior to this engagement that would be considered significant or influential in their decision-making.

CP 8-K: Financial Events

Summary

Canadian Pacific Kansas City Ltd. (CP) has officially announced a change in its independent registered public accounting firm. On November 4, 2021, following a recommendation from its Audit and Finance Committee, the company requested Deloitte LLP to resign as its auditor. This decision comes in the context of CP's pending acquisition of Kansas City Southern (KCS), a significant transaction that may necessitate a transition in auditing services. Deloitte's resignation will be effective after the completion of their audit for the fiscal year ending December 31, 2021. Concurrently, CP has engaged Ernst & Young LLP (EY) as its new independent registered public accounting firm, subject to their client acceptance process. This change of auditor is a standard procedure often undertaken by companies when preparing for or closing significant corporate events like mergers and acquisitions. Investors should note that the prior auditor, Deloitte, did not report any disagreements or reportable events in its tenure, and CP has stated no consultations with EY occurred that would be considered significant prior to this engagement. The company has also filed Exhibit 16.1, a letter from Deloitte LLP confirming their position.

Key Highlights

1Canadian Pacific Railway Limited (CP) is changing its independent registered public accounting firm, with Deloitte LLP resigning.
2The resignation of Deloitte LLP was requested by CP's Audit and Finance Committee on November 4, 2021.
3This change is contextualized by CP's pending acquisition of Kansas City Southern (KCS).
4Deloitte's resignation is effective upon the completion of their audit for the fiscal year ending December 31, 2021.
5Ernst & Young LLP (EY) has been engaged as the new independent registered public accounting firm, subject to client acceptance.
6There were no disagreements or reportable events with Deloitte during their tenure, as defined by SEC regulations.
7CP confirms no prior consultations with EY on significant accounting or auditing matters prior to this engagement.

CANADIAN PACIFIC KANSAS CITY LTD/CN 8-K Report, Auditor Change (Nov 10, 2021)

Summary

Key Highlights

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