ITEM 4.01 Changes in Registrant’s Certifying Accountant.
On June 29, 2015, Ernst & Young LLP (“E&Y”) indicated to MVC Capital, Inc. (the “Fund”) its determination not to stand for reappointment as the independent registered public accounting firm of the Fund for the fiscal year ending October 31, 2015. The determination was accepted by the Fund’s Audit Committee at a meeting held the following day. The process for identifying a successor auditor is underway. E&Y will remain as the Fund’s auditor for the financial statements to be included in the Annual Report on Form 10-K for the Fund’s fiscal year ended October 31, 2014 and the restated financial statements to be included in an amended Annual Report on Form 10-K for the fiscal year ended October 31, 2013 (together, the "2014 and 2013 Financial Statements"), both audits of which are currently in progress.
(The Fund anticipates disclosing any updates on the expected timing of the filing of the 2014 Annual Report on 10-K and the restated reports.)
E&Y has not yet issued its audit report on the 2014 Financial Statements nor has it reissued its audit report on the 2013 Financial Statements due to the ongoing restatement work referenced above.
During the Fund’s fiscal years ended October 31, 2013 and October 31, 2014, and during the interim period between October 31, 2014 and the date hereof, there were no disagreements between the Fund and E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference thereto in its report nor were there any “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K, except as follows. In connection with the 2014 and the 2013 Financial Statements (where, as previously disclosed, 2014 has been significantly delayed and 2013 will be restated), E&Y has advised the Fund of a material weakness in internal controls over financial reporting concerning valuation related controls associated with certain affiliated or controlled portfolio companies (e.g., MVC Auto and SGDA). Given that the relevant audits are not complete, the Audit Committee has only preliminarily discussed these matters with E&Y. Management is in the process of developing a plan to enhance certain controls that will be presented to the Audit Committee and which would ultimately be discussed with the successor independent registered public accounting firm (which has not yet been engaged).
The Fund requested and received a letter from E&Y addressed to the U.S. Securities and Exchange Commission stating whether or not it agrees with the above statements. A copy of such letter, dated July 6, 2015, is filed as an exhibit to this Form 8-K.