UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 14, 1998
Transnational Financial Corporation
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(Exact name of small business issuer as specified in its charter)
California 1-14219 94-2964195
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(State or other jurisdiction (Commission File (I.R.S.Employer
of incorporation) Number) Identification No.)
401 Taraval Street, San Francisco, CA 94116
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code: (415) 334-7000
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 4. Changes in Registrant's Certifying Accountant.
Effective September 14, 1998, Transnational Financial Corporation (the
"Company") appointed Deloitte & Touche LLP as its independent auditors for the
fiscal year ending December 31, 1998, to replace the firm of Moss Adams LLP, who
was dismissed as auditors of the Company contemporaneously therewith and has
been asked to furnish a letter to the Securities & Exchange Commission to the
effect that it has no material disagreements with the statements made in this
Item 4.
Management represents as follows:
(a) There have been no disputes between management and the
auditors and the auditors' reports contained no adverse opinion or
disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
(b) The decision to change accountants from Moss Adams LLP
(the "Accountant") to Deloitte & Touche LLP has been approved by the
Company's Board of Directors
(c) During the registrant's two most recent fiscal years and
any subsequent interim period there were no disagreements with the
Accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure. The
registrant has authorized the Accountant to respond fully to the
inquiries of the successor accountant.
(d) The Accountant expressed no disagreement or difference of
opinion regarding any "reportable" event as that term is defined in
Item 304(a)(1)(v) of Regulation S-K, including but not limited to:
(i) except as set forth in (e) below, the Accountant
has not advised the registrant that the internal controls
necessary for the registrant to develop reliable financial
statements do not exist;
(ii) the Accountant has not advised the registrant
that information has come to the Accountant's attention that
has led it to no longer be able to rely on management's
representations, or that has made it unwilling to be
associated with the financial statements prepared by
management;
(iii) the Accountant has not advised the registrant
of the need to expand significantly the scope of its audit, or
notified the registrant that information has come to the
Accountant's attention that if further investigated may (A)
materially impact the fairness or reliability of either: a
previously issued audit report or the underlying financial
statements, or the financial statements issued or to be issued
covering the fiscal period(s) subsequent to the date of the
most recent financial statements covered by an audit report
(including information that may prevent it from rendering an
unqualified audit report on those financial statements), or
(B) cause it
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to be unwilling to rely on management's representations or be
associated with the registrant's financial statements, and due
to the Accountant's resignation (due to audit scope
limitations or otherwise) or dismissal, or for any other
reason, the Accountant did not so expand the scope of its
audit or conduct such further investigation;
(iv) the Accountant has not advised the registrant
that information has come to the Accountant's attention that
it has concluded materially impacts the fairness or
reliability of either (A) a previously issued audit report or
the underlying financial statements, or (B) the financial
statements issued or to be issued covering the fiscal
period(s) subsequent to the date of the most recent financial
statements covered by an audit report (including information
that, unless resolved to the Accountant's satisfaction, would
prevent it from rendering an unqualified audit report on those
financial statements), and due to the Accountant's
resignation, or for any other reason, the issue has not been
resolved to the Accountant's satisfaction prior to its
resignation.
(e) In a report to the United States Department of Housing and
Urban Development, dated March 12, 1998, the Accountant indicated the
following with respect to the registrant:
"The Company did not employ a sufficient number of accounting
and finance personnel. The effects of not maintaining an
adequate accounting staff and system of internal controls can
result in errors in the processing and recording of financial
data.
"The Company has experienced rapid growth in recent years, and
is in a phase of transition, moving from a small, closely held
business towards a larger, professionally managed
organization. Accordingly, in the past, the Company has
focused resources on its core loan production business, and
has oriented itself towards developing processes and controls
over administering loan origination and secondary marketing
activities rather than emphasizing the reporting of financial
data."
The Accountant concluded, "The reportable condition described
above is a material weakness." The registrant stated in the same
report:
"We agree with the auditors reportable condition...Until the
advent of recent growth, our Company was able to operate
efficiently without a complex or sophisticated accounting
system.
"Pursuant to an extensive interview and hiring process, the
Company has employed a corporate controller who is experienced
in the mortgage banking industry. The addition of experienced
personnel in the accounting and finance area will ensure that
financial data is reported properly."
In the same letter the Accountant concluded that it had
"performed tests of its [the
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Company's] compliance with certain provisions of laws, regulations,
contracts and grants, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was
not an objective of our audit and, accordingly we do not express such
an opinion. The results of our tests disclosed no instances of
noncompliance that are required to be reported under Government
Auditing Standards."
(f) The registrant has provided the Accountant with a copy of
the disclosures it is making in response to Item 304(a) of Regulation
S-K. The registrant has requested that the Accountant furnish the
registrant with a letter addressed to the Commission stating whether it
agrees with the statements made by the registrant. The Company has
appended such letter hereto as exhibit 16.
Item 7. Financial Statements and Exhibits.
Exhibit 16. Letter re change in certifying accountant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf, thereby
duly authorized.
Date: September 15, 1998
Transnational Financial Corporation
/s/ Joseph Kristul
Joseph Kristul, Chief Executive Officer
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Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
We were previously principal accountants for Transnational Financial Corporation
(the Company) and on June 4, 1998, we reported on the financial statements of
Transnational Financial Corporation as of December 31, 1997 and for each of the
years in the two-year period ended December 31, 1997. On September 14, 1998, we
were dismissed as principal accountants of the Company. We have read the
Company's statements included under Item 4 of its Form 8-K for September 14,
1998 and we agree with such statements.
/s/ Moss Adams LLP
San Francisco, California
September 15, 1998
