Today, Nasdaq-listed blockchain firm Triterras announced that KPMG has resigned as an “independent accountant” – or rather, a chartered accountant – and the board is launching an independent investigation into allegations made in a short seller report. The press release downplayed KPMG news by opening the independent investigation. Furthermore, reading the press release would likely lead to an interpretation that the exit was amicable while KPMG resigned as auditor. We have confirmed with Triterras that the resignation relates to the role of auditor and not to accounting.
The company’s quarterly report through November 2020, the first since it was listed, has not been audited, although publicly traded companies do not require an audit for the quarterly report. But given the circumstances, it would add extra convenience.
As we previously reported, the blockchain trade and trade finance firm is facing a class action lawsuit over related party transactions and a damaging report from a short seller. These types of reports are designed to generate profits when the stock price falls. The short report also focused on related party transactions as well as strange trading patterns. Triterras merged with a Nasdaq-listed SPAC Netfin in November 2020.
Rotate the announcement
Triterras wanted to emphasize that KPMG has not qualified its reports in the past two years. Here is the part of the press release that describes the resignation:
“The company has also announced that it will replace KPMG LLP as the company’s independent accountant. For some time now there has been deliberation and discussion regarding the replacement of the company’s independent accountants for a variety of reasons, including further separating the business of Triterras, Inc. from its affiliate Atanium (formerly Rhodium Resources). KPMG LLP resigned as the company’s independent accountant effective January 20, 2021. “The resignation decision is nearly 200 words in the press release.
Atanium / Rhodium is one of the related parties of Triterras CEO, Srinivas Koneru, which was published in the prospectus. Rhodium is a customer. Initially, the entire Triterras customer was brought into the platform and Triterras was owed $ 1.7 million.
However, the SEC filing on the same subject was much more factual and beginning. “On January 20, 2021, Triterras, Inc. (the“ Company ”) board of directors received a formal notice that the Company’s independent auditor, KPMG LLP (“ KPMG ”) had decided to step down as independent accountants effective January 20, 2021 . “
It is further alleged that there was no disagreement with KPMG “regarding accounting principles or practices, disclosure of financial statements or audit scope or procedures”. Which begs the question of why KPMG stepped down?
Especially at this sensitive time for the company. Given the circumstances, if KPMG could step down from Triterras or Rhodium, which are in financial trouble, you would think that both Triterras and KPMG would prefer to stay with the publicly traded company.
This message reveals two more pieces of information. The surprising fact that KPMG had a stake in both Triterras and Rhodium at the time it was listed. And the SEC announcement states that the only relevant reportable event was “material weaknesses in the company’s internal control over financial reporting (the” material weaknesses “) as identified in the company’s registration statement”.
Regarding the other announcement made today, the Board’s Audit Committee plans to oversee an independent legal investigation into the allegations in the Summary Report and is seeking a lawyer. It is said that it is important to set the record directly above “incorrect and / or incomplete information contained in the most recent summary report.”
Rhodium’s problems preceded the Triterras listing
On December 17, 2020, Triterras announced that its client and debtor Rhodium had petitioned the courts in Singapore to protect him from creditors while it restructured its debt. This followed a legal request for payment from Antanium Resources on December 1, 2020.
Triterras merged with a listed SPAC in November 2020. However, rhodium was already showing signs of financial challenges. In September 2020, it was sued by MayBank, Malaysia’s largest bank, for $ 3.16 million in bills of exchange.
To update: The article has been updated to clarify that the resignation affects KPMG’s role as auditor. The company creates the accounts itself.