After problems surrounding a delayed disclosure of Urban One’s 2022 earnings that almost led to their being delisted from Nasdaq, the company is changing accounting firms. Urban One had been using BDO, but after a mishap around the accounting on MGM National Harbor profits, they are switching to Ernst and Young.
In an SEC filing, Urban One documents how BDO had previously done two years’ worth of accounting reports for Urban One. While mostly amicable, the companies had a disagreement over how Urban One was keeping track of its financial information and processes.
It appears the main problem that led to the 2022 filing six months after the fact was that Urban One realized that initial accounting underestimated the value of their MGM National Harbor Casino Investment. This meant they needed to change their financial statements for both the full year ending on December 31, 2021, and the interim period ending on September 30, 2022.
In addition to this adjustment, Urban One found and corrected several other mistakes that they thought were not significant enough to materially impact any period presented in their previously issued financial statements. These errors had to do with things like how they were accounting for the depreciation of radio broadcasting licenses, the handling of certain assets, and the classification of certain items in their balance sheet. They also found some mistakes in their cash flow statements and some disclosures related to deferred tax assets and content assets.
In a statement addressing this news, BDO said, “We have been furnished with a copy of the response to Item 4.01 of Form 8-K for the event that occurred on July 11, 2023, to be filed by our former client, Urban One, Inc. We agree with the statements made in response to that item insofar as they relate to our Firm.”
It’s a company’s responsibility to ensure their financials are properly managed and that necessary filings with the SEC are made on time. An auditor, like BDO, is an external entity that reviews a company’s financials for accuracy but isn’t typically involved in the timeline for filing reports with the SEC.
That being said, the significant issues discovered during the Urban One audit would have required extra time to resolve, and likely contributed to a delayed filing. Either way, Urban One has talked about these issues with BDO and are allowing BDO to share this information with Ernst and Young in the transition.
