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Ebix selects accounting firms +3

07:47 28-Dec-18


Ebix has selected RSM US LLP as its auditor for 2019.  RSM is cited as the fifth largest accounting firm in the United States, rather than one of the big four, as originally projected.  However, Ebix has also decided to continue using KPMG for M&A consulting and Ernst & Young for tax and internal audit services.  Perhaps the most important part of the press release is this quote:

Lastly the Company reiterated that it in connection with the audits of the Company's consolidated financial statements for the fiscal years ended December 31, 2016 and 2017, and in the subsequent interim period till 27th December 2018, there were no disagreements with any of its present or past auditors on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of the auditors, would have caused them to make reference to the matter in their report.
That's nothing new, but it's what investors should want to know.  The drop in EBIX shares coincided with news of the change in accounting firm, but it was likely more a matter of doubt over the new business model, in combination with broader market trends.  So, while this doesn't change everything, it should be regarded as a positive that removes one of the lingering sources of doubt.  I'll look for firmer catalysts as we progress through 2019, but I think both this stock and the market have lots of shorter-term adjustments in store.