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In connection with the preparation of this Quarterly Report on Form 10-Q, management evaluated the Company's disclosure controls and procedures.
−Removed: The evaluation was performed under the direction of the Company's Chief Executive Officer and Chief Financial Officer to determine the effectiveness, as of March 31, 2023, of the design and operation of the Company's disclosure controls and procedures.
−Removed: Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, at March 31, 2023, the Company’s disclosure controls and procedures were not designed effectively to ensure timely alerting of material information relating to the Company required to be included in the Company's periodic SEC filings.
−Removed: In the fiscal fourth quarter of 2021 and the fiscal third quarter of 2022, the Company identified control deficiencies related to access permissions in two loan systems which resulted in a lack of segregation of duties over disbursements in which select individuals had the ability to both initiate and approve disbursements indicating that the user access provisioning and user entitlement review monitoring controls did not function to a precise level to ensure segregation of duties was maintained.
−Removed: Management determined that the combination of user access provisioning and user entitlement review deficiencies represent a material weakness in internal controls over financial reporting on the basis that the deficiencies could result in a misstatement potentially impacting the Company's financial statement accounts and disclosures that would not be prevented or detected on a timely basis.
−Removed: REMEDIATION PLAN FOR REPORTED MATERIAL WEAKNESS
−Removed: Annual entitlement review for the loan system identified in the fourth quarter of 2021 was performed in March 2022 and no inappropriate access was identified.
−Removed: For the loan system identified with inappropriate system access in fiscal third quarter of 2022, management removed access for the individuals that had inappropriate access and performed testing of disbursements during the impacted period and did not identify any instances where the segregation of the disbursement over initiation and approval was not maintained.
−Removed: In May 2022, management also implemented an IT application control to identify instances where the initiator and approver are the same to prevent disbursement from occurring.
−Removed: The Company is in the midst of undergoing a broader risk assessment and other remediation actions and ongoing monitoring activities, across all material applications, and is on track with the stated project plan.
−Removed: These remediation steps will strengthen the control environment surrounding user access controls.
+Added: The evaluation was performed under the direction of the Company's Chief Executive Officer and Chief Financial Officer to determine the effectiveness, as of June 30, 2023, of the design and operation of the Company's disclosure controls and procedures.
+Added: Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2023, the Company’s disclosure controls and procedures were designed effectively to ensure timely alerting of material information relating to the Company required to be included in the Company's periodic SEC filings.
+Added: The Company had previously disclosed a material weakness related to access permissions in two loan systems which resulted in a lack of segregation of duties over disbursements in which select individuals had the ability to both initiate and approve disbursements indicating that the user access provisioning and user entitlement review monitoring controls did not function to a precise level to ensure segregation of duties was maintained.
+Added: The remediation of this condition was completed as of June 30, 2023.
+Added: REMEDIATION PLAN FOR PREVIOUSLY REPORTED MATERIAL WEAKNESS
+Added: The Company completed a broad risk assessment across all financially significant applications to identify and monitor conflicting roles which has strengthened the control environment surrounding user access controls.
+Added: User access provisioning preventative controls were strengthened to monitor for the conflicting roles identified in the risk assessment described above.
+Added: System entitlement detective reviews have increased frequency from annual to quarterly cycles.
+Added: Management has also implemented a system application control to systematically restrict the ability to both initiate and disburse funds in one of the significant commercial systems which had inappropriate access leading to the material weakness.
+Added: In combination, management believes remediation of the material weakness has occurred as of June 30, 2023.
INHERENT LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
−Removed: Management conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
−Removed: Based on this evaluation, management concluded that, as of the end of the period covered by this report, there were changes in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the 1934 Act) that were reported in the prior fiscal year that are still under remediation and continue during the fiscal third quarter to which this report relates that could have materially affected the Company’s internal controls over financial reporting, as described above.
+Added: Management conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
+Added: Based on this evaluation, management concluded that, as of the end of the period covered by this report, there were changes in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the 1934 Act) that were reported in the prior fiscal year and prior quarters where remediation was completed during the fiscal third quarter to which this report relates that could have materially affected the Company’s internal controls over financial reporting, as described above.
PATHWARD FINANCIAL, INC.
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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.