Munger’s Daily Journal Resolves Material Weaknesses in Controlsby
Publisher says it made ‘significant changes’ to processes
Company has switched accounting firms twice since 2014
Daily Journal Corp., a publisher that counts billionaire investor Charles Munger as chairman, has shored up how it discloses information to investors after years of disputes with auditors.
“Management believes that its internal controls over financial reporting is effective” as of June 30, Los Angeles-based Daily Journal said Tuesday in its quarterly filing to the U.S. Securities and Exchange Commission. “The company has made significant changes to its internal controls to rectify those previously identified material weaknesses” mentioned in its annual report.
In its previous quarterly filing in May, Daily Journal had said its disclosure controls and procedures weren’t effective.
Few companies of Daily Journal’s size would draw much attention. But its affiliation with Munger -- best known as Warren Buffett’s longtime business partner at Berkshire Hathaway Inc. -- has made the firm a curiosity among investors. Its annual meeting typically draws a standing-room-only crowd of a few hundred people, who come to ask Munger questions and listen to his thoughts on investing, the economy and politics.
The publisher’s market value has more than tripled to $313 million since the end of 2009, thanks in part to an investment that Munger made in Wells Fargo & Co. during the depths of the financial crisis. As Daily Journal grew, it struggled to meet the accounting standards required of larger firms.
The company has burned through two auditors. Ernst & Young LLP faulted the company’s internal controls in 2014 and was fired. Its next accounting firm, BDO USA LLP, determined last year that there were material weaknesses tied to financial reporting, and was replaced in February by Squar Milner LLP.