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American Apparel says auditor Deloitte resigned
July 29, 2010 / 9:17 PM / 7 years ago

American Apparel says auditor Deloitte resigned

* Deloitte resigns, clothing co. rehires Marcum as auditor

* Both firms cited questions over financial reporting

* Shares tumble 14 pct

SAN FRANCISCO, July 29 (Reuters) - American Apparel APP.A said Deloitte & Touche, its independent auditor for over a year, had resigned earlier this month.

Shares of the hipster apparel maker and retailer fell 14 percent.

American Apparel, which makes clothes in its own factory in Los Angeles, said that on July 26, it reappointed Marcum LLP to be its new auditor.

The firm, then known as Marcum & Kliegman, had been terminated from that role in April 2009.

The news, released Wednesday in a filing with the U.S. Securities & Exchange Commission, comes after a tense period for the company marked by a last-minute scramble for a debt lifeline. [ID:nN13132529]

Last month, American Apparel secured a new deal with its creditor in exchange for a loosened covenant, and billionaire investor Ron Burkle secured a 6 percent stake in the company. [ID:nSGE65N0G3]

In a Deloitte report dated March 31, the firm identified material weaknesses in American Apparel’s internal control over financial reporting, the company said in its filing.

The outside firm also said that certain information had come to light that could materially impact the reliability of its previously issued audit report or the financial statements for the year ended Dec, 31 2009, American Apparel said.

American Apparel reiterated that Marcum, meanwhile, “expressed an adverse opinion on the effectiveness of the company’s internal control over financial reporting” as described in a filing with the SEC on April 20, 2009.

Shares of American Apparel closed down 14 percent at $1.55 on the American Stock Exchange. (Reporting by Alexandria Sage; Editing by Richard Chang)

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