Logitech 2014 Annual Report Download - page 102

Change in Independent Auditor
As disclosed in a Current Report on Form 8-K filed by the Company on November 13, 2014, PwC S.A.
and PwC LLP declined to stand for re-election as Logitech’s independent auditors and as Logitech’s independent
registered public accounting firm, respectively, for the fiscal year ending March 31, 2015. On November 12,
2014, the Audit Committee of the Board of Directors (the “Audit Committee”) of Logitech appointed KPMG LLP
(“KPMG”) as the Company’s independent registered public accounting firm for the fiscal year ending March 31,
2015 for purposes of U.S. securities law reporting purposes.
Information about PricewaterhouseCoopers LLP
The reports of PwC on the Company’s financial statements for the fiscal years ended March 31, 2013 and
March 31, 2014 did not contain an adverse opinion or a disclaimer of opinion; nor were they qualified or modified
as to uncertainty, audit scope or accounting principles. In connection with the audits of the Company’s financial
statements for the fiscal years ended March 31, 2014 and 2013 and in the subsequent interim period through
November 6, 2014 there were no “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K)
with PwC LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing
scope or procedures which, if not resolved to the satisfaction of PwC LLP would have caused PwC LLP to make
reference to the matter in their reports.
There were “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K) during the
fiscal years ended March 31, 2014 and March 31, 2013 and the subsequent interim period through November 6,
2014, as follows. On September 2, 2014 (U.S. time), the Company announced that the Audit Committee concluded
that the consolidated financial statements for the years ended March 31, 2011 and 2012 included in Logitech’s
Annual Reports on Form 10-K for the fiscal years ended March 31, 2013, 2012 and 2011 and for the three months
ended June 30, 2011 included in Logitech’s Quarterly Report on Form 10-Q for the three months ended June 30,
2011 can no longer be relied on due to an accounting misstatement for inventory valuation reserves for Logitech’s
now discontinued Revue product. The restated fiscal year 2012 consolidated financial statements are included in
the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014. In addition, as previously
disclosed in the Company’s Annual Report on Form 10-K/A for the fiscal year ended March 31, 2013, the Company’s
management concluded that material weaknesses existed as of March 31, 2013, as follows:
• The Company did not design and maintain effective controls over the review of supporting information
to determine the completeness and accuracy of the consolidated statement of cash flows, the
consolidated statement of comprehensive income (loss) and disclosures in the notes to the consolidated
financial statements; and
• The Company did not maintain effective controls related to developing an appropriate methodology
to accrue the costs of product warranties given to end customers, including an on-going review of the
assumptions within the methodology to determine the completeness and accuracy of the warranty accrual.
In addition to these material weaknesses, which continued to exist as of March 31, 2014, as a result of the
Audit Committee’s investigation and the restatement of the Company’s financial statements the Company’s
management concluded that two additional material weaknesses existed as of March 31, 2014, including:
• The Company did not maintain an effective control environment as former finance management
exercised bad judgment and failed to provide effective oversight, which resulted in ineffective
information and communication, whereby certain of the Company’s finance personnel did not adequately
document and communicate accounting issues across the organization, including to our independent
registered public accounting firm. Additionally, there was an insufficient complement of personnel with
appropriate accounting knowledge, experience and competence, resulting in incorrect conclusions in
the application of generally accepted accounting principles; and
• The Company did not design and maintain effective controls to consider all relevant information
and document the underlying assumptions in our assessment of the valuation of finished goods, work
in process and components inventory, including non-cancelable orders for such inventory, related to
our now discontinued Revue product.
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