BDO Should Be Thanking Its Lucky Stars That Swisher Hygiene Fired Them

By | May 22, 2015

BDO, an audit firm, had a difference of opinion with Swisher Hygiene, Inc., a client, about the company's internal controls over financial reporting. Specifically, BDO identified 12 material weaknesses and 5 significant deficiencies. Contrast that with Swisher's analysis that found no material weaknesses and 1 significant deficiency. Also! BDO's audit opinion for for 2014 contained a going concern warning. Alternatively, the Company's analysis found no going concern issues. 

Like I said, a difference of opinion. A difference of opinion that got BDO fired and Grant Thornton hired.

Interestingly, the Charlotte Observer reported last month that the Swisher admitted that things weren't looking so good based on what the company said in its 10-K. Also worth noting — the Observer reported in February 2014 that Swisher settled a lawsuit for $5.5 million with shareholders who claimed the company was inflating its stock price through "deliberately misstating its financial results." That lawsuit arose out of a restatement that the company made on its 2011 results. The restatement came about after Florida gazillionaire Wayne Huizenga and his business partner Steve Berrard acquired Swisher in 2004, started gobbling up companies to boost the revenues and screwed up the accounting in the process. Before that, the company's founder, Patrick Swisher was sentenced to jail in 2002 for tax evasion. And before that, the company settled SEC charges of accounting fraud in 2001.

Two questions: 1) Why did BDO keep Swisher as a client all this time? and 2) Why the hell is Grant Thornton picking them up as a client?

If you have answers or wild-ass theories for either, please share.

Swisher fires accounting firm BDO USA [CO]
Form 8-K [SEC]
Form 10-K [SEC]