Maker of Bubble Wrap and other packaging products dismisses audit firm Ernst & Young and hires PricewaterhouseCoopers
Sealed Air Corp. has dismissed audit firm Ernst & Young LLP and hired PricewaterhouseCoopers LLP, citing dissatisfaction over the audit-firm selection process and a possibility it could be forced by the government to change auditors, the company disclosed.
The replacement took effect Aug. 7 but was disclosed this week in a securities filing. It is the latest development related to federal investigations into the company’s financial practices and audit-firm selection process, starting in 2015, including the independence of the audit firm.
The independence of an auditor is considered a bedrock of audit quality, and violations can force a company to re-audit financial statements.
As part of PwC’s appointment, Sealed Air disclosed it had paid PwC a total of about $223,000 in fees in 2019.
PwC declined to comment.
Sealed Air said that EY maintains that there was no independence violation, “and the company has not reached a contrary conclusion.”
Still, it cited a Securities and Exchange Commission investigation and the audit committee’s “dissatisfaction with information it learned about the process by which EY was selected as auditor” as reasons that led to the audit-firm change “to allow for an orderly transition…and to minimize the risk of disruption that could arise in the event of an unplanned change in independent auditors.”
Monday’s securities filing made no reference to a related criminal investigation, a disclosure the company tucked into a separate regulatory filing.
Reached by email, a company representative referred to the regulatory filing and declined to comment on the investigations, the audit-firm selection process or the company’s dissatisfaction with the EY selection process.
An EY representative said the firm “performed its work with rigor, objectivity, impartiality and skepticism, in full compliance with all applicable professional standards.”
“We stand by the quality of our work, and our independence as Sealed Air’s auditors,” spokesman John La Place wrote in an emailed statement.
Charlotte, N.C.-based Sealed Air, best known for its Bubble Wrap packaging material, fired its finance chief in June, citing the SEC investigation.
An attorney for the former chief financial officer, Bill Stiehl, said he would contest the termination.
“Sealed Air’s acknowledgement that it has not found an independence violation is powerful evidence that it did not have ‘cause’ to fire Mr. Stiehl,” wrote the attorney, Josh Van Kampen.
By Maria Armental. Write to Maria Armental at firstname.lastname@example.org