The filing also highlighted that during the two most recent fiscal years and the interim period leading up to the dismissal, there were no disagreements between the company and Deloitte on accounting principles or practices. However, the company did identify material weaknesses in its internal control over financial reporting, which were disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025. These weaknesses stemmed from insufficient segregation of duties and inadequate information system controls, which were exacerbated by a reduction in employee headcount.
In conjunction with the dismissal of Deloitte, the audit committee approved the engagement of Ramirez Jimenez International CPAs (RJI) as the new independent registered public accounting firm. This transition is expected to begin with the review of the company's financial statements for the quarter ending March 31, 2026, and will include the audit of the consolidated financial statements for the year ending December 31, 2026. The decision to engage RJI was also approved by the audit committee, indicating a proactive approach to addressing the identified weaknesses in governance and operational execution.
The implications of these changes are significant for Arcadia Biosciences, particularly in terms of governance controls and operational execution. The dismissal of a major auditing firm like Deloitte may raise concerns among investors regarding the company's financial oversight and internal controls. However, the swift appointment of a new auditor may help to mitigate some of these concerns and restore confidence in the company's financial reporting processes.
