Karat Packaging Inc. Announces Change of Independent Registered Public Accounting Firm

Karat Packaging Inc. (NASDAQ: KRT) has announced a significant change in its independent registered public accounting firm, a move that may attract the attention of investors and could potentially influence the company’s share price.

Key Highlights

• New Auditor Appointed: On March 13, 2026, the Audit Committee of the Board of Directors approved the engagement of BDO USA, P.C. (“BDO”) as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2026.
• Dismissal of Previous Auditor: Effective the same day, Karat Packaging Inc. dismissed PricewaterhouseCoopers LLP (“PwC”) as its independent registered public accounting firm.
• No Adverse Opinions or Disagreements: PwC’s audit reports for the years ended December 31, 2024 and 2025 did not contain any adverse opinion, disclaimer of opinion, or qualification/modification as to uncertainty, audit scope, or accounting principles. Furthermore, there were no disagreements between the Company and PwC on any accounting principles, financial statement disclosures, or auditing procedures during the relevant period.
• Material Weaknesses in Internal Controls (Remediated): The Company previously disclosed in its Form 10-K for the year ended December 31, 2023, material weaknesses in internal control over financial reporting related to:
  • Certain information technology general controls impacting the preparation of the financial statements.
  • Maintenance of designed entity-level controls impacting the control environment, risk assessment, and monitoring activities.

  All these issues were remediated as of December 31, 2024.

• Segregation of Duties Issue: A separate material weakness was identified for the year ended December 31, 2024, regarding segregation of duties related to creation, approval, and modification of journal entries. This was remediated as of March 31, 2025.
• No Consultations with BDO Prior to Appointment: During the fiscal years ended December 31, 2024 and 2025, and through March 13, 2026, neither Karat Packaging nor anyone acting on its behalf consulted with BDO on any accounting, auditing, or financial reporting matter.
• PwC’s Concurrence: PwC has provided a letter to the U.S. Securities and Exchange Commission stating it agrees with the disclosures related to its dismissal. This letter is included as Exhibit 16.1 in the Form 8-K.

Implications for Shareholders

• This change in auditor could be price-sensitive, as investors often scrutinize changes in a company’s independent registered public accounting firm for possible indications of internal control issues, accounting disagreements, or potential governance concerns.
• The fact that material weaknesses were identified but have since been remediated is important. Any history of material weaknesses in internal controls can weigh on investor confidence, but the company’s remediation efforts may help mitigate concerns.
• No disagreements with the prior auditor and the absence of adverse opinions are positive factors, suggesting the change is not due to disputes or negative findings.
• The appointment of BDO, a reputable firm, helps to reassure stakeholders about the integrity of the company’s future financial reporting.

Other Information

• Company Information: Karat Packaging Inc. is incorporated in Delaware, with principal executive offices at 6185 Kimball Avenue, Chino, CA 91708. The company’s common stock trades under the symbol KRT on the NASDAQ.
• Emerging Growth Company: Karat Packaging is classified as an “emerging growth company” under relevant SEC rules.

Conclusion

The change in auditor, combined with the company’s history of material weaknesses (now remediated), is a development investors should monitor closely. While there is no indication of unresolved disputes or negative audit opinions, such transitions can sometimes be perceived as signals of change in internal processes or financial reporting practices. Investors are advised to review future financial reports carefully for any new disclosures or changes in audit opinions.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider seeking advice from a qualified financial advisor before making investment decisions. The author is not responsible for any investment actions taken based on this information.

View Karat Packaging Inc. Historical chart here