Item 4. Controls and Procedures
Item 4. Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
A&F maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in the reports that A&F files or submits 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 A&F’s management, including A&F’s principal executive officer and A&F’s principal financial officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.
A&F’s management, including the Chief Executive Officer of A&F (who serves as Principal Executive Officer of A&F) and the Executive Vice President and Chief Financial Officer of A&F (who serves as Principal Financial Officer and Principal Accounting Officer of A&F), evaluated the effectiveness of A&F’s design and operation of its disclosure controls and procedures as of the end of the fiscal quarter ended May 1, 2021. The Chief Executive Officer of A&F (in such individual’s capacity as the Principal Executive Officer of A&F) and the Executive Vice President and Chief Financial Officer of A&F (in such individual’s capacity as the Principal Financial Officer of A&F) concluded that A&F’s disclosure controls and procedures were not effective at a reasonable level of assurance as of May 1, 2021, due to the material weakness in A&F’s internal control over financial reporting as described further below.
REMEDIATION EFFORTS TO ADDRESS PREVIOUSLY IDENTIFIED MATERIAL WEAKNESS
As previously disclosed within “ITEM 9A. CONTROLS AND PROCEDURES” of the Company’s Fiscal 2020 Form 10-K, A&F did not design and maintain effective controls over the presentation and disclosure of activities in its Condensed Statements of Cash Flows. Specifically, A&F did not design and maintain controls to research and apply relevant accounting guidance in assessing the appropriate classification of cash flow activities associated with new transaction types. This material weakness resulted in the restatement of the Condensed Consolidated Statement of Cash Flows for the interim periods ended May 2, 2020, August 1, 2020, and October 31, 2020.
As part of A&F’s efforts to remediate the material weakness described above, new procedures have been designed and implemented during A&F’s fiscal quarter ended May 1, 2021 to research and apply relevant accounting guidance regarding the classification of cash flow activities associated with new transaction types and to document A&F management’s conclusions with respect to such analysis. Management believes these procedures will remediate the material weakness during Fiscal 2021 but it will not be considered remediated until the controls related to these procedures operate for a sufficient period to allow for testing to determine the operating effectiveness of the controls.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
The remediation activities described above under “Remediation Efforts” are changes in A&F’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during A&F’s fiscal quarter ended May 1, 2021 that materially affected, or are reasonably likely to materially affect, A&F’s internal control over financial reporting.
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PART II. OTHER INFORMATION