8-K/AOther Events

FIRSTENERGY CORP 8-K/A Report (May 7, 2002)

Filed May 7, 2002For Securities:FE

Summary

This 8-K/A filing from FirstEnergy Corp. (FE) reports an amendment to a previous 8-K filing, primarily detailing a change in its independent auditor. Effective April 11, 2002, Arthur Andersen LLP was dismissed as FirstEnergy's independent accountant, with PricewaterhouseCoopers LLP appointed as the new auditor. This change occurred after the completion of the 2001 audits and related regulatory filings, including the adoption of new accounting standards for derivative instruments (SFAS No. 133). The filing assures investors that there were no disagreements with Arthur Andersen regarding accounting principles or audit procedures in the preceding two fiscal years. This auditor change may prompt investor scrutiny regarding the reasons and implications for the company's financial reporting and audit processes.

Key Highlights

  • 1Amendment to a prior 8-K filing dated April 18, 2002.
  • 2Dismissal of Arthur Andersen LLP as FirstEnergy's independent accountant, effective upon completion of 2001 audits and regulatory filings.
  • 3Appointment of PricewaterhouseCoopers LLP as the new independent accountant, effective for the first quarter of 2002.
  • 4Confirmation that Arthur Andersen's reports for the past two fiscal years contained no adverse opinions or modifications, except for a change in accounting principle related to SFAS No. 133.
  • 5No disagreements on accounting principles, financial statement disclosures, or auditing procedures with Arthur Andersen LLP.
  • 6No reportable events, as defined by Regulation S-K, occurred with Arthur Andersen during the relevant periods.
  • 7Arthur Andersen LLP provided a letter to the SEC agreeing with the statements made in this filing.

Frequently Asked Questions

The filing states that Arthur Andersen LLP was dismissed effective with the completion of the 2001 audits and related regulatory filings. While the specific underlying reasons for the dismissal beyond the completion of services are not detailed, the change is a routine event in corporate governance. Investors should note that this occurred following Arthur Andersen's role in audits for the prior two years, and no disagreements on accounting principles or auditing procedures were reported.

The filing explicitly states that there were no disagreements with Arthur Andersen LLP on any matter of accounting principles, practices, financial statement disclosure, or auditing scope or procedure during the two most recent fiscal years. Arthur Andersen's reports were not qualified or modified, except for a change in accounting principle related to SFAS No. 133. This suggests that the change in auditor is not related to any unresolved accounting disputes or issues identified by the former auditor.

SFAS 133, 'Accounting for Derivative Instruments and Hedging Activities,' as amended, became effective for FirstEnergy Corp. on January 1, 2001. This standard requires companies to recognize all derivatives as assets or liabilities on the balance sheet and to measure them at fair value. Changes in fair value are recognized in earnings unless specific hedge accounting criteria are met. The modification to Arthur Andersen's 2001 audit report to identify this change in accounting principle signifies an important update in how FirstEnergy reports its financial position related to financial derivatives and hedging activities.

FirstEnergy requested a letter from Arthur Andersen LLP to the Securities and Exchange Commission stating whether they agree with the statements made in this Form 8-K/A filing concerning the change of accountants. This letter, dated May 7, 2002, is filed as an exhibit and serves to corroborate FirstEnergy's account of the auditor change and confirm Arthur Andersen's concurrence with the disclosures made.