Item
4.01. Changes in Registrant’s Certifying
Accountant
On
September 14, 2007, the Audit Committee of the Board of Directors (the
“Committee”) of Audible, Inc. (the “Registrant” or the “Company”) dismissed KPMG
LLP, as the Registrant’s principal accountants. The decision to
change accountants was approved by the Committee. In
addition, the Committee appointed McGladrey & Pullen, LLP as its new
independent registered public accounting firm subject to the completion of
their
customary acceptance process for the fiscal year ending December 31,
2007.
During
the two fiscal years ended December 31, 2006 and the subsequent interim period
through September 14, 2007, the Registrant had no (1) disagreements with KPMG
LLP on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which disagreements, if not resolved
to the satisfaction of KPMG LLP, would have caused KPMG LLP to make reference
in
connection with their opinion to the subject matter of the disagreement, or
(2)
reportable events, except that KPMG LLP advised the Registrant of the material
weaknesses described below in connection with their audits of management’s
assessment of the effectiveness of internal control over financial reporting
and
the effectiveness of internal control over financial reporting as of December
31, 2006 and 2005. The Registrant has authorized KPMG LLP to respond
fully to the inquiries of McGladrey & Pullen, LLP concerning the subject
matter of the reportable events.
The
audit
reports of KPMG LLP on the consolidated financial statements of the Registrant
and subsidiary as of and for the years ended December 31, 2006 and 2005 did
not
contain any adverse opinion or disclaimer of opinion, nor were they qualified
or
modified as to uncertainty, audit scope or accounting principles, except as
follows:
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KPMG
LLP’s report on the consolidated financial statements of the Registrant
and subsidiary as of and for the years ended December 31, 2006 and
2005,
contained a separate paragraph stating that “As discussed in Note 6 to the
consolidated financial statements, the Company changed its method
of
accounting for share-based compensation effective January 1,
2006. Also, as discussed in Note 18, the Company changed its
method of quantifying misstatements effective January 1,
2006.”
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The
audit reports of KPMG LLP on
management’s assessment of the effectiveness of internal control over financial
reporting and the effectiveness of internal control over financial reporting
as
of December 31, 2006 and 2005 did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope,
or accounting principles, except that KPMG LLP’s reports indicate that the
Registrant did not maintain effective internal control over financial reporting
because of the effect of material weaknesses on the achievement of the
objectives of the control criteria and contain explanatory paragraphs that
state
that: as of December 31, 2006, the following material weaknesses were
identified: ineffective execution of non-routine contracts; inadequate financial
information and communication; ineffective review of account analyses; and
inadequate identification and analysis of international non-income tax related
matters; and as of December 31, 2005, the following material weaknesses were
identified: insufficient accounting personnel resources; inadequate information
and communication; inadequate risk assessment; ineffective contract management;
and ineffective control over retail promotions.
On
September 14, 2007, the Registrant requested that KPMG LLP furnish it with
a
letter addressed to the Securities and Exchange Commission stating whether
it
agrees with the above statements and, if not, stating the respects in which
it
does not agree. A copy of the letter received from KPMG LLP in
response to such request, which is dated September 20, is filed as Exhibit
16.1
to this Current Report on Form 8-K.
During
the two year period ended December 31, 2006, and for the subsequent period
through the date hereof, the Registrant did not consult with McGladrey &
Pullen, LLP regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.