PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee has selected KPMG LLP as our independent registered public accounting firm for fiscal 2025, subject to stockholder ratification at the Annual Meeting.
The audit committee charter does not require that our stockholders ratify the selection of KPMG LLP as our independent registered public accounting firm. We are doing so because we believe it is a matter of good corporate governance practice. If our stockholders do not ratify the selection, our audit committee may reconsider whether to retain KPMG LLP, but still may retain that firm. Even if the selection is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our or our stockholders’ best interests.
Representatives of KPMG LLP are expected to be present at the Annual Meeting and will be given the opportunity to make a statement and answer appropriate questions that may be asked by stockholders.
Change in Auditors
On June 21, 2024, the audit committee selected KPMG LLP to serve as our independent registered public accounting firm, effective as of such date, and notified Deloitte & Touche LLP (“Deloitte”) of its dismissal as our independent registered public accounting firm effective as of that date.
Deloitte’s reports on our consolidated financial statements for each of the fiscal years ended December 31, 2023 and January 1, 2023 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
During each of the fiscal years ended December 31, 2023 and January 1, 2023, and the subsequent interim periods through the date of dismissal, there were no “disagreements,” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between us and Deloitte 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 Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in its reports on our consolidated financial statements for such years.
There were no “reportable events”, as that term is defined in Item 304(a)(1)(v) of Regulation S-K, during either of the fiscal years ended December 31, 2023 or January 1, 2023, and the subsequent interim periods through the date of dismissal, except that we identified material weaknesses in our internal control over financial reporting as disclosed in Item 9A, Controls and Procedures, of our Annual Report on Form 10-K for each of the fiscal years ended December 31, 2023 and January 1, 2023, as described below.
As disclosed in our Annual Report on Form 10-K for the year ended January 1, 2023, we previously identified material weaknesses in the Control Environment, Risk Assessment, and Control Activities components of the Committee of Sponsoring Organizations (“COSO”) framework, including a material weakness in the revenue accounting process as of January 1, 2023. As subsequently disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, during the fiscal year ended December 31, 2023, with the oversight of the audit committee, we implemented controls in accordance with our remediation plans to address these material weaknesses. Based on the remediation actions completed in the fiscal year ended December 31, 2023, we remediated the material weaknesses in the Control Environment and Risk Assessment Components of the COSO framework. Additionally, while we implemented the necessary internal controls across our accounting processes and accounting information technology processes to address the material weaknesses in the Control Activities component of the COSO framework, including the revenue accounting process material weakness, during the fiscal year ended December 31, 2023, we were not able to demonstrate sustained operation of these controls, and therefore were not able to fully remediate the material weakness in the Control Activities component of the COSO framework, including the revenue accounting process material weakness as of December 31, 2023. While we believe our efforts have improved the design of our internal control over financial reporting, remediation of the material weakness in the Control Activities component of the COSO framework, including the revenue accounting process material weakness require further validation and testing of the effectiveness of those controls implemented as part of our remediation plans over a sustained period of time. Accordingly, the material weakness in the Control Activities component of the COSO framework, including the revenue accounting process material weakness, was not remediated as of the date of dismissal.
