B. Riley Discloses Reporting Weaknesses Amid Auditor Transition

Core Viewpoint - B. Riley Financial Inc. is facing significant challenges due to identified weaknesses in its controls, which may impact its financial reporting and regulatory compliance [1][2][3]. Group 1: Audit and Financial Reporting - B. Riley has reported 10 weaknesses in its controls, including issues related to technology and investment valuation, identified during consultations with Marcum LLP [1][2]. - The company is dismissing Marcum after the completion of the overdue 2024 annual report, which has not been given a specific completion date [2]. - Nasdaq has warned B. Riley of potential delisting on September 29 if audited results are not filed by then [3]. Group 2: Related Party Transactions - The auditor has emphasized the need for B. Riley to improve its processes for identifying and disclosing material related-party transactions, which could pose conflicts of interest [4]. Group 3: Past Issues and Investigations - The quality of B. Riley's reports came under scrutiny after the bankruptcy of Franchise Group Inc., one of its major holdings, leading to an SEC investigation [5]. Group 4: Financial Health and Future Audits - B. Riley is working on improving its balance sheet and cash flows by selling assets and refinancing debt, reporting positive net income from operating businesses for the first time since late 2023 [6]. - Marcum is currently handling the 2024 audit while preparing to transition duties to BDO USA for the 2025 filings [7]. - BDO USA has indicated it would not be independent for auditing due to prior non-audit services provided to B. Riley, which were terminated in April [8].