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As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (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 quarterly report.
−Removed: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective as of March 31, 2023 due to the material weaknesses in internal control over financial reporting described below, which were previously disclosed in Item 9A.
+Added: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective as of June 30, 2023 due to the material weaknesses in internal control over financial reporting described below, which were previously disclosed in Item 9A.
“Controls and Procedures”
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Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of March 31, 2023 due to the material weaknesses in internal control over financial reporting identified and further described below.
+Added: Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of June 30, 2023 due to the material weaknesses in internal control over financial reporting identified and further described below.
A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: We continue to have previously identified control deficiencies that are not remediated as of March 31, 2023 related to user access controls related to an information technology system which resulted from insufficient risk assessment and ineffective operation of process level controls over revenue recognition, which resulted from insufficient training.
+Added: We continue to have previously identified control deficiencies that are not remediated as of June 30, 2023 related to user access controls related to an information technology system which resulted from insufficient risk assessment and ineffective operation of process level controls over revenue recognition, which resulted from insufficient training.
As a result of the user access control deficiencies, process level controls at certain entities that use information from the affected system cannot be relied upon.
−Removed: These control deficiencies constitute material weaknesses in our internal control over financial reporting as of March 31, 2023.
+Added: These control deficiencies constitute material weaknesses in our internal control over financial reporting as of June 30, 2023.
Ongoing Remediation Plan
Management has undertaken various steps to continue remediating such control deficiencies and has seen improved results versus December 31, 2022.
−Removed: Steps taken by us during the three months ended March 31, 2023 include the following:
−Removed: Reduced privileged access to those accounts necessary to carry on system activities;
−Removed: Established weekly and monthly monitoring of privileged access activity.
+Added: Steps taken by us during the three months ended June 30, 2023 include the following:
+Added: Performed weekly and monthly monitoring of privileged access activity;
+Added: Conducted training with operating company personnel related to required level of documentation and proper review of estimates related to revenue recognition.
We plan to continue our efforts to strengthen our internal control over financial reporting and are committed to ensuring that such controls are operating effectively.
We are implementing process and control improvements to address the above material weakness as follows:
−Removed: We will conduct additional training with control owners and reviewers within operations and finance with a specific focus on sufficient documentation and evidence in the execution of the controls;
−Removed: We will conduct an evaluation of information technology general controls ("ITGCs") and related policies, with a focus on risk assessment procedures and controls related to access to information technology ("IT") systems and implement an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes.
+Added: Continue to conduct ongoing training with control owners and reviewers within operations and finance with a specific focus on sufficient documentation and evidence in the execution of the controls;
+Added: Perform corporate level review of high risk contracts and their related revenue recognition documentation;
+Added: Conduct an evaluation of information technology general controls ("ITGCs") and related policies, with a focus on risk assessment procedures and controls related to access to information technology ("IT") systems and implement an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes.
As anticipated, a remediation effort of this magnitude takes multiple years to complete and we have made significant progress with the Company’s multi-year remediation plans.
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We are executing our remediation plans to remediate the material weaknesses relating to our internal control over financial reporting, as described above.
−Removed: Other than changes described above, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: Other than changes described above, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
OTHE R INFORMATION
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.