ADT Inc. 10-Q/A

ITEM 4. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our DCPs (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Amended First Quarter 2023 Quarterly Report. Based on such evaluation at the time our Original First Quarter 2023 Quarterly Report was filed, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2023, our DCPs were effective at a reasonable assurance level. Subsequent to that evaluation and as a result of the material weakness in our ICFR discussed below, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2023, our DCPs were not effective at a reasonable assurance level in ensuring information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Material Weakness in Internal Control over Financial Reporting A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected in a timely basis. We did not maintain effective controls over income tax accounting for non-routine or complex transactions. Specifically, we did not maintain effective controls to timely identify and account for the tax implications of goodwill impairment. This material weakness resulted in the restatement of our consolidated financial statements for the year ended December 31, 2022, as well as our condensed consolidated financial statements for the three and nine months ended September 30, 2022 and the three months ended March 31, 2023. Additionally, this material weakness could result in misstatements of the accounts or disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. Remediation Plan Upon identification of the material weakness, our management developed a remediation plan to address the material weakness, which includes updating our procedures regarding the recognition of the tax impacts related to goodwill impairments to specifically review the considerations of all tax impacts caused by the recognition of such goodwill impairments in accordance with the relevant accounting guidance. Our management believes the measures described above and others that may be implemented will remediate the material weakness that we have identified. However, the material weakness will not be considered remediated until the remediation plan has been implemented and there has been appropriate time for us to conclude through testing that the controls are operating effectively. As our management continues to evaluate and improve our ICFR, we may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified. Changes in Internal Control over Financial Reporting During the three months ended March 31, 2023, there were no changes in our ICFR identified in our management’s evaluation pursuant to Rules 13a-15(d) and 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, our ICFR. 42 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. See Note 13 “Commitments and Contingencies” to the condensed consolidated financial statements under the heading “Legal Proceedings” included in this Amended First Quarter 2023 Quarterly Report for legal proceedings and related matters.