Daily Journal Corp., the California publisher that counts billionaire Charles Munger as chairman, dismissed Ernst & Young after the auditor faulted the company's accounting.
Daily Journal expects to hire a new accounting firm "within the coming days," the Los Angeles company said Thursday in a regulatory filing.
Ernst & Young determined that there were flaws in the publisher's accounting for acquisitions and deferred tax provisions, Daily Journal said Tuesday in its report for the fiscal year that ended Sept. 30. The document had been delayed amid a review of internal controls over financial reporting. Daily Journal has also postponed the filing of two quarterly reports.
"The company believes that its internal control over financial reporting was effective," Daily Journal said in the filing.
Ernst & Young doesn't comment on dealings with clients, said John La Place, a spokesman for the firm. A spokesman for Daily Journal didn't return a call seeking comment.
Daily Journal publishes California Lawyer magazine and newspapers that cover legal affairs, business and real estate. Munger, 90, is best known as the vice chairman of Warren Buffett's Berkshire Hathaway Inc.
A jump in Daily Journal's market value triggered the requirement for the more rigorous review. The shares have doubled in the last 12 months, giving the company a market capitalization of about $300 million. The publisher benefited from a rally in a stock portfolio that Munger helped assemble in the financial crisis.
Although Ernst & Young faulted Daily Journal's internal controls, the auditor did sign off on the company's financial statements. Ernst & Young sent a letter to the Securities and Exchange Commission saying that it agreed with the characterization of its dismissal.Copyright © 2014, Los Angeles Times