Corva › Blog › When an auditor resigns
Filings and disclosure
The disclosure lands as a Form 8-K under Item 4.01, and most readers stop at the first paragraph. The information is in the last exhibit, which is a letter from the departing auditor saying whether the company told the truth.
8 min read· Corva Research
The short version
Search for what happens when an auditor resigns and you get academic abstracts behind paywalls, a Quora thread, and opinion pieces about one company. What you do not get is the item number. The event has a form, the form has a fixed structure, and the structure is the answer.
A company whose accountant resigns files a current report on Form 8-K under Item 4.01, Changes in Registrant's Certifying Accountant. It is public, usually under 800 words, and follows the same template every time. What follows walks a real one line by line, including the exhibit that carries the actual signal.
The company has four business days to file. Form 8-K's general instructions set the deadline plainly: "a report is to be filed or furnished within four business days after occurrence of the event."
Item 4.01 itself is short. The SEC's own Form 8-K triggers disclosure when an accountant previously engaged as the principal accountant "resigns (or indicates that it declines to stand for re-appointment after completion of the current audit) or is dismissed". The substance then comes from Item 304(a)(1) of Regulation S-K.
One structural point most readers miss. The instruction to Item 4.01 makes the departure and the hiring separate events, so a single auditor change can produce two 8-Ks. If you only found the second, you have not read the whole story.
Item 304(a)(1)(i) is a single sentence: "State whether the former accountant resigned, declined to stand for re-election or was dismissed and the date thereof." The company must pick one. It cannot write "the relationship concluded". The three describe different parties deciding at different moments.
| Event | Who initiated | Timing relative to the audit |
|---|---|---|
| Resigned | The auditor | Can be mid-engagement, before an opinion is signed |
| Declined to stand for re-appointment | The auditor | After the current audit is finished |
| Dismissed | The company | Either |
Definitions from 17 CFR 229.304(a)(1)(i) and the Instruction to Item 4.01 of Form 8-K.
A firm that declines to stand for re-appointment has finished the work and signed the report. A firm that resigns partway through has not. The second is the one worth slowing down for, and it is the reason the date in that sentence matters as much as the verb.
Beyond naming the event, Item 304(a)(1) forces four statements. Read them as a checklist, because a filing that skips one is itself a finding.
The disagreement test has a trap in it. A disagreement counts if it would have caused a reference in the report, and the instruction to Item 304 says the term is to be "interpreted broadly, to include any difference of opinion". So "no disagreements" does not mean the auditor and management never argued. It means no argument reached the threshold of changing the report.
Reportable events are the wider net. Item 304(a)(1)(v) lists four, and the SEC's own investor bulletin on reading an 8-K paraphrases them cleanly:
Any one of those, disclosed, is a serious sentence. In practice you will read a hundred filings that say there were none. Which raises the obvious question of who is checking that claim.
On 21 June 2024, Eton Pharmaceuticals filed an 8-K under Item 4.01. The first paragraph does the whole job:
"Effective May 20, 2024, the partners and professional staff of KMJ Corbin & Company LLP ("KMJ"), which had been engaged as the independent registered public accounting firm of Eton Pharmaceuticals, Inc. (the "Company"), joined Crowe LLP ("Crowe"). As a result, KMJ resigned as the Company's independent registered public accounting firm on June 14, 2024."
That is a resignation, and it has nothing to do with Eton. The audit firm ceased to exist as a separate practice. The people doing the work did not change, the letterhead did. Eton's audit committee appointed Crowe the same day.
The filing then walks the checklist in order. The reports for the two years ended 31 December 2023 and 2022 "did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles." No disagreements, quoting the full statutory clause rather than summarising it. No reportable events, with the citation to Item 304(a)(1)(v) written in. Then the sentence that tells you where to look next: "A copy of the letter from KMJ is filed as Exhibit 16.1 hereto."
Almost every Item 4.01 filing contains that sentence. Almost nobody follows it.
Item 304(a)(3) is the reason the whole filing has teeth. The registrant must request that the former accountant furnish "a letter addressed to the Commission stating whether it agrees with the statements made by the registrant in response to this Item 304(a) and, if not, stating the respects in which it does not agree." The letter goes on EDGAR as Exhibit 16.1, in the same filing, one click away.
Here is Eton's, in full:
"We have read the comments made regarding us in Item 4.01 of Form 8-K of Eton Pharmaceuticals, Inc. dated June 14, 2024, and are in agreement with those statements. /s/ KMJ Corbin & Company LLP"
Thirty-one words, unqualified, no carve-outs. That is the strongest form the letter takes, and it is worth reading because it is the only sentence in the filing not written by the company.
The second form is a partial agreement, and it is where readers most often mistake boilerplate for a warning. When American Woodmark (AMWD) replaced KPMG in May 2022, KPMG's letter agreed with the company's statements "except that we are not in a position to agree or disagree with the Company's statement that the change was approved by the Audit Committee of the Board of Directors", and likewise on whether the incoming firm had been consulted. That is not a dispute. KPMG was not in the audit committee meeting, so it declines to vouch for a fact it cannot know.
The counts settle it. Searching EDGAR full-text search across 8-K filings since 2001, "not in a position to agree or disagree" appears in 3,585 documents. "We do not agree with the statements" appears in 15. Both checked 7 September 2026.
The hedge is routine. Open disagreement is roughly 240 times rarer.
So the third form, a letter naming specific statements it will not endorse and saying what it thinks instead, is the rarest document in this corner of EDGAR. The concerning version is not an accusation. It is a narrow, lawyerly refusal to confirm one particular sentence, and the identity of that sentence is the whole message. Read it against the company's paragraph line by line and find the claim that went unsupported.
A missing letter is its own signal. Item 304(a)(3) lets the registrant file it within ten business days if it is not available at filing, then within two business days of receipt. An Item 4.01 filing that never gets its 16.1 amendment has an unanswered question in it.
The calendar changes the meaning of an identical filing. A new auditor has to learn the business, review the predecessor's working papers, then plan and run a full-year audit. Time is the variable.
Form 10-K's general instructions give the outer bounds: 60 days after fiscal year end for large accelerated filers, 75 days for accelerated filers, and 90 days for everyone else. Measure the auditor change against those dates, not against the calendar year.
Eton's fiscal year ends 31 December. KMJ resigned on 14 June 2024 and Crowe was appointed the same day, leaving six months before year end and nine before the 10-K was due. Eton filed its FY2024 annual report on 18 March 2025, in line with the mid-March timing of its previous four. Nothing slipped.
Now change one fact. Suppose the same resignation were dated 14 February, with the same 31 December year end and a 90-day deadline. The incoming firm would have about six weeks to audit a year it had not observed. Identical boilerplate, different situation.
So when the timing is tight, check two more things: whether a Form 12b-25 followed for a late annual report, and whether an Item 4.02 filing appeared, which is the item for financial statements that should no longer be relied upon. Item 4.01 and Item 4.02 within a few months of each other is a different picture from either alone.
Everything above is a reading method, not a suspicion. The honest counterweight to the whole post is that auditor changes are ordinary housekeeping most of the time.
The PCAOB published the best public figure in October 2025, in Data Points: Financial Restatements and Auditor Turnover. Across 2005 to 2024, "the auditor-change rate across the broader population ranged from 8% to 13% (averaging 11%)". Roughly one company in nine changes auditor in a given year.
The same study found "an average of 29% of companies with Big R restatements reported an auditor change in the year preceding the restatement". Read both numbers together. A change is nearly three times as frequent ahead of a serious restatement, and 71% of restating companies did not change auditor at all. The signal is real and weak. It is a reason to read the filing, never a conclusion.
The benign explanations are numerous, and the Eton filing is one of them:
The last of those is the awkward one for the reader, because it looks identical to the first six in the filing and is not identical at all. A firm that quietly decides a client is not worth the risk still writes "resigned" and still confirms no disagreements, because there were none that met the test. Item 4.01 does not ask why.
The form is a disclosure checklist, not an explanation. Its limits are specific.
Which is the general shape of filing analysis. The form tells you what the form asks. The skill is knowing what it does not.
On EDGAR. Open the company's filing list, filter to form type 8-K, and look at the items listed for each filing, since EDGAR tags them. You can also use EDGAR full-text search, which covers filings since 2001, and filter by form type 8-K.
No. Item 304(a)(1) requires the company to state which of the three events occurred and the date, whether the last two reports were clean, whether the audit committee approved the change, and whether there were disagreements or reportable events. A reason is not on that list. Many companies supply one voluntarily.
The letter the former accountant addresses to the SEC saying whether it agrees with the company's Item 4.01 disclosure. It is required by Item 304(a)(3) and filed in the same 8-K. It is usually one or two sentences and it is the only independent voice in the document.
It is meaningful as a legal statement and weak as a signal, because the threshold is high: a disagreement counts only if it would have caused the auditor to refer to it in its report. The statement gains force when Exhibit 16.1 confirms it, because at that point two parties have signed the same sentence.
Not on that fact alone. Resignation means the auditor initiated the change, which is worth a closer read, but firm mergers, practice closures and portfolio decisions all produce resignations with nothing behind them. Look at the date relative to fiscal year end, check Exhibit 16.1, and check whether an Item 4.02 filing followed.
Yes, and the instruction to Item 4.01 says so directly. The departure and the engagement of the replacement are separate reportable events. Where the new firm is named later, the second filing carries the Item 304(a)(2) disclosure about prior consultations with that firm.
Corva reads the 8-K stream alongside the annual report, so an Item 4.01 change surfaces with its date, its exhibit letter and its position in the reporting calendar rather than as a headline. Figures are computed from the filed statements and cross-checked against SEC EDGAR. Where something cannot be found, it says so rather than inventing it.
Research a company free →Live financials on any listed company are free. No card.
Related reading: how to read a 10-K, and what actually moves gross margin, which covers the accounting note that changes a ratio without changing the business.
Corva is a research tool, not a broker or investment adviser, and nothing here is a recommendation to buy, sell or hold any security. Eton Pharmaceuticals and American Woodmark are cited solely as documented examples of routine, disclosed auditor changes, and no adverse inference about either company is intended or supported by the filings quoted. All quotations are taken from the filings linked above and from 17 CFR 229.304, Form 8-K and Form 10-K as published by the SEC. Verify anything you intend to act on against the primary filing. See terms and disclaimer.