Energy XXI Gulf Coast, Inc. (NASDAQ:EXXI) Files An 8-K Changes in Registrant’s Certifying Accountant
Item 4.01
| Change in Registrants Certifying Accountant |
On March 7, 2017, the Audit Committee of the Board of Directors
of Energy XXI Gulf Coast, Inc. (the Company) approved the
dismissal of BDO USA, LLP (BDO) as the Companys independent
registered public accounting firm, subject to the completion by
Ernst Young LLP of their client acceptance procedures. These
procedures were completed on March 9, 2017 (the Dismissal Date).
On the Dismissal Date, the Company notified BDO of its dismissal
effective immediately.
The reports of BDO on the financial statements of the Company and
its predecessor, Energy XXI Ltd, for the transition period ended
December 31, 2016 and for the years ended June 30, 2016 and 2015
contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or
accounting principles, except that the report for the year ended
June 30, 2016, included an explanatory paragraph that described
conditions that raised substantial doubt about the Companys
ability to continue as a going concern as described in Notes 1
and 3 to the financial statements and the audit report of BDO on
the effectiveness of our internal control over financial
reporting as of June 30, 2015 contained an adverse opinion on our
internal control over financial reporting due to material
weaknesses involving internal controls and procedures described
below.
In connection with its audits of the transition period ended
December 31, 2016 and the years ended June 30, 2016 and 2015 and
reviews of the Companys financial statements through the
Dismissal Date, there were no disagreements with BDO on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of BDO, would have caused
them to make reference thereto in their reports on the financial
statements, and no reportable events as set forth in Item
304(a)(1)(v) of Regulation S-K, except that in its 2015 report
BDO advised that internal controls necessary for the registrant
to develop reliable financial statements did not exist as a
result of material weaknesses involving internal controls and
procedures related to the following:
| (i) |
management failed to design and maintain controls over the documentation of hedge designations to provide reasonable assurance that derivative contracts would be properly recorded and disclosed in the consolidated financial statements; and |
| (ii) |
the Companys Chief Executive Officer failed to disclose certain potential conflicts of interests which, given his leadership position and the visibility and importance of his actions to the Companys overall system of controls, is considered a material weakness in the Companys control environment. |
At the time of the material weaknesses, the matters disclosed in
this Current Report on Form 8-K (this Form 8-K) were discussed by
the Audit Committee and management with representatives of BDO.
The Company has authorized BDO to respond fully to the inquiries
of the successor independent registered public accounting firm as
detailed below.
The Company has provided BDO with a copy of the disclosures
required by Item 304(a) of Regulation S-K contained in this Form
8-K and has requested that BDO furnish the Company with a letter
addressed to the Securities and Exchange Commission stating
whether BDO agrees with the statements made by the Company in
this Form 8-K and, if not, stating the respects in which it does
not agree. A copy of BDOs letter, dated March 9, 2017, is filed
as Exhibit 16.1 to this Form 8-K.
Also, on the Dismissal Date, the Audit Committee approved the
engagement of Ernst Young LLP as its new independent registered
public accounting firm. The Companys Audit Committee unanimously
approved and authorized the change, directed the process of
review of candidate firms to replace BDO and made the final
decision to engage Ernst Young LLP.
During the two most recent fiscal years and through the Dismissal
Date, the Company has not consulted with Ernst Young LLP on any
matter that involved the application of accounting principles to
a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered on the Companys
financial statements.
| Item 9.01 | Financial Statements and Exhibits |
|
Exhibit Number |
Description | |
| 16.1 |
Letter, dated March 9, 2017 from BDO USA, LLP addressed to the U.S. Securities Exchange Commission |
Energy XXI Gulf Coast, Inc. (NASDAQ:EXXI) Recent Trading Information
Energy XXI Gulf Coast, Inc. (NASDAQ:EXXI) closed its last trading session down -0.56 at 29.44 with 14,727 shares trading hands.