Why did Cheniere Energy change its independent auditor?

Cheniere Energy changed its independent auditor from Ernst & Young LLP (EY) to KPMG LLP for the fiscal year ending December 31, 2014. The change was approved by the Audit Committee of the Board of Directors and was not a result of any disagreements regarding accounting principles, financial statement disclosures, or auditing procedures.

Were there any issues with the previous auditor, Ernst & Young?

No, the filing explicitly states that there were no disagreements with Ernst & Young LLP (EY) on any matters of accounting principles, practices, financial statement disclosure, or auditing scope or procedure. EY's reports for the fiscal years 2013 and 2012 were unqualified, meaning they did not contain any adverse opinions or qualifications.

Did Cheniere Energy consult with KPMG before this appointment?

Yes, the company had engaged in extensive consultations with KPMG LLP prior to their appointment as the principal auditor. These consultations covered various complex accounting areas, including consolidation of variable interest entities, classification of debt and equity, accounting for derivatives and hedging, debt issuance costs, and stock compensation plans. The company's accounting treatment for these matters was consistent with the guidance provided by KPMG.

What is the significance of changing auditors for investors?

A change in auditors can be significant for investors as it represents a transition in the company's financial oversight. While this filing indicates no disagreements with the outgoing auditor, investors may closely examine the reasons for the change and the qualifications of the new auditor. The detailed disclosure of prior consultations with KPMG suggests a level of familiarity and potentially a smoother transition. Investors should also review the accompanying letters from both EY and KPMG for further confirmation.

LNG 8-K: Financial Events

Summary

Cheniere Energy, Inc. (LNG) filed an 8-K on March 24, 2014, to report a change in its independent registered public accounting firm. Effective March 18, 2014, the company's Audit Committee approved the appointment of KPMG LLP as its new auditor for the fiscal year ending December 31, 2014, and dismissed Ernst & Young LLP (EY). This change is significant for investors as it involves a transition in the oversight of the company's financial reporting. The filing clarifies that the dismissal of EY was not due to any disagreements on accounting principles, financial statement disclosures, or auditing procedures. EY's reports for fiscal years 2013 and 2012 were unqualified. The company also detailed extensive prior consultations with KPMG on various complex accounting matters, including consolidation, debt and equity classification, derivatives, and stock compensation, indicating a pre-existing relationship and familiarity.

Key Highlights

1Cheniere Energy appointed KPMG LLP as its new independent registered public accounting firm for the fiscal year ending December 31, 2014.
2Ernst & Young LLP (EY) was dismissed as the company's independent registered public accounting firm.
3The change in auditors was approved by Cheniere's Audit Committee on March 18, 2014.
4There were no disagreements with EY on any accounting principles, financial statement disclosures, or auditing matters.
5EY's reports on the financial statements for fiscal years 2013 and 2012 were unqualified.
6Cheniere had previously consulted with KPMG on various complex accounting matters, including consolidation, debt/equity classification, derivatives, and stock compensation.
7Letters from both EY and KPMG confirming the above statements are filed as exhibits to this report.

Cheniere Energy, Inc. 8-K Report, Auditor Change (Mar 24, 2014)

Summary

Key Highlights

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