CLPR Clipper Realty Inc

Item 4.01. Change in Registrant’s Certifying Accountant

 

On September 29, 2022, based on the approval of the Audit Committee (the “Audit Committee”) of the Board of Directors of Clipper Realty Inc. (the “Company”), the Company engaged PKF O’Connor Davies, LLP (“PKF”) as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2022, and related interim periods, effective immediately, and dismissed BDO USA, LLP (“BDO”) as the Company's independent registered public accounting firm.

 

BDO’s audit reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2021, and 2020 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 the years ended December 31, 2021, and 2020, and the subsequent interim periods through September 28, 2022, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to BDO’s satisfaction, would have caused BDO to make reference thereto in their reports on the financial statements for such years, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K except that management identified a material weakness in the Company's internal control over financial reporting as of December 31, 2020 which was identified and disclosed in Management's Report on Internal Control over Financial Reporting in Item 9A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The Company restated the unaudited condensed consolidated financial statements as of and for each of the interim periods within the year ended December 31, 2020, to correct inadvertent errors in the application of generally accepted accounting principles relating to the accounting for straight-line rent associated with the reassessment of a lease term. Management identified that a deficiency in its processes and procedures that led to the misapplication of guidance in connection with accounting for a modification of an existing commercial lease to constitute a material weakness in our internal control over financial reporting. The Company remediated the previously identified deficiency prior to the issuance of its Annual Report on Form 10-K for the year ended December 31, 2021.

 

The Company provided BDO with a copy of the disclosures it is making in this Current Report on Form 8-K and requested that BDO furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made herein. A copy of BDO’s letter dated October 4, 2022, is filed as Exhibit 16.1 hereto.

 

During the years ended December 31, 2021, and 2020, and the subsequent interim periods through September 28, 2022, neither the Company nor anyone acting on its behalf has consulted with PKF regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements and neither a written report or oral advice was provided to the Company that PKF concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.