KVH Industries, Inc. Announces Change in Auditor
June 06 2014 - 5:05PM
KVH Industries, Inc., (Nasdaq:KVHI) announced today that, effective
June 6, 2014, it has changed its auditor from KPMG LLP (KPMG) to
Grant Thornton LLP (Grant Thornton) for the year ending December
31, 2014. The change was made following a solicitation of proposals
from several accounting firms and was approved by the Audit
Committee of the Board of Directors of KVH.
KVH has previously distributed a proxy statement to its
stockholders in connection with the solicitation of proxies for the
upcoming 2014 Annual Meeting of Stockholders to be held on June 11,
2014. This press release is intended to supplement and update the
information contained in the proxy statement.
As a result of the engagement of Grant Thornton, KVH no longer
expects that representatives of KPMG LLP will be present at the
annual meeting.
There has been no change in the matters to be voted upon at the
annual meeting or to the proxy cards and voting instruction forms
previously distributed to stockholders. KVH will not be
distributing new proxy cards or voting instruction forms.
Stockholders who have already voted in accordance with the
instructions contained in the proxy statement and related materials
do not need to submit new proxy cards or give new voting
instructions unless they wish to change their
votes. Stockholders who have not yet voted can still use the
proxy cards and voting instruction forms previously provided to
them. KVH encourages stockholders to review the proxy
statement carefully before voting.
Supplemental Disclosure For The Proxy Statement
As supplemental disclosure, KVH is providing stockholders with
the following information, which has been reported by KVH in a
current report on Form 8-K filed with the Securities and Exchange
Commission on June 6, 2014:
During KVH's two most recent fiscal years and the subsequent
interim period preceding the engagement of Grant Thornton as KVH's
independent registered public accounting firm, neither KVH nor
anyone acting on KVH's behalf consulted Grant Thornton regarding
any of the matters referred to in Item 304(a)(2) of Regulation
S-K.
KPMG's reports on KVH's consolidated financial statements for
the two most recent fiscal years did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During KVH's two most recent fiscal years and the subsequent
interim period preceding the termination of KPMG as its independent
registered public accounting firm, (a) there were no
"disagreements" (as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K) between KPMG and KVH on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement, if not resolved to the
satisfaction of KPMG, would have caused it to make reference to the
subject matter of the disagreement in connection with its report on
KVH's consolidated financial statements and (b) there were no
"reportable events" (as that term is defined in Item 304(a)(1)(v)
of Regulation S-K), except as described below.
In its annual report on Form 10-K for the year ended December
31, 2012, KVH reported a material weakness in its internal control
over financial reporting arising from a fraudulent scheme by the
most senior member of its accounting staff at its Danish subsidiary
to misappropriate assets from KVH over a period of at least three
years. The scheme included fraudulent wire transfers to a
personal bank account, fraudulent documentation, forged signatures
and use of a corporate credit card for personal expenses. For
the three years ended December 31, 2013, the aggregate amount of
misappropriated funds in any year ranged from approximately
$118,000 to $250,000. KVH recovered these losses in 2013
through its insurance policies. Management's assessment of the
effectiveness of KVH's internal control over financial reporting at
December 31, 2012 identified the following control deficiencies at
its Danish subsidiary as a material
weakness: (i) override of access controls over banking
security devices and personal identification numbers enabling the
unauthorized execution of wire transfers, (ii) ineffective
review controls over the supporting documentation by the subsidiary
country general manager over expenditures and expenses, and
(iii) override of review controls designed to address the
accuracy and approval of manual journal entries at the Danish
subsidiary. As a result of this material weakness, KPMG's
report on KVH's internal control over financial reporting concluded
that KVH did not maintain effective internal control over financial
reporting as of December 31, 2012.
As described in KVH's annual report on Form 10-K for the year
ended December 31, 2013, management implemented a remediation plan
and concluded that, as of December 31, 2013, the material weakness
had been remediated and its internal control over financial
reporting was effective. The Audit Committee of KVH's Board of
Directors discussed this material weakness with KPMG following the
discovery of the fraudulent scheme and on several other occasions
during the remediation period.
The Audit Committee of KVH's Board of Directors has authorized
KPMG to respond fully to the inquiries of Grant Thornton concerning
this material weakness.
About KVH Industries, Inc.
KVH Industries, Inc., is a leading manufacturer of solutions
that provide global high-speed Internet, television, and voice
services via satellite to mobile users at sea, on land, and in the
air as well as a leading provider of commercially-licensed news,
sports, music, movies and training video content to commercial and
leisure customers in the maritime, hotel, and retail markets. KVH
is also a premier manufacturer of high-performance navigational
sensors and integrated inertial systems for defense and commercial
guidance and stabilization applications. The company is
headquartered in Middletown, Rhode Island, with sales offices in
the United Kingdom, Denmark, Norway, Singapore, Japan, and Cyprus,
as well as a subsidiary in Brazil that manages local sales.
CONTACT: KVH Industries, Inc.
Peter Rendall
401-847-3327
prendall@kvh.com
FTI Consulting
Christine Mohrmann
212-850-5600
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