Controls and Procedures
−Removed: Evaluation of Disclosure Controls and Procedures
−Removed: Management of the Company, with the participation of its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the period ending September 30, 2023.
−Removed: Based upon our evaluation, our CEO and our CFO have concluded that, as of the period ending September 30, 2023, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO and our CFO, as appropriate, to allow timely decisions regarding required disclosure.
−Removed: Prior to the quarter ended June 30, 2023, Fortrea relied on certain material processes and internal controls over financial reporting performed by Labcorp.
+Added: Disclosure Controls and Procedures
+Added: Disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that 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 our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
+Added: Internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the override of controls.
+Added: Therefore, even those systems determined to be effective can provide only “reasonable assurance” with respect to the reliability of financial reporting and financial statement preparation and presentation.
+Added: Further, because of changes in conditions, the effectiveness of our internal controls may vary over time.
+Added: Our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of March 31, 2024.
+Added: Based on this evaluation, our chief executive officer and our chief financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to accomplish their objectives at the reasonable assurance level due to the material weaknesses described below.
+Added: Material Weaknesses in Internal Control over Financial Reporting
+Added: A material weakness 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 the annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: In the course of preparing our financial statements for the interim period ended March 31, 2024, management identified material weaknesses in our internal controls over financial reporting that existed because the company did not have sufficient resources which in turn led to an inability to effectively perform certain control activities and fulfill its internal control and accounting responsibilities.
+Added: Management believes that the condensed consolidated and combined financial statements and related financial information included in this Form 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.
+Added: Remediation Efforts to Address a Material Weaknesses in Internal Control over Financial Reporting
+Added: We are actively developing and implementing a comprehensive remediation plan.
+Added: We plan to hire, develop and retain incremental personnel with appropriate accounting and internal controls expertise and review and update (as appropriate) training programs on relevant internal controls over financial reporting matters.
+Added: We have engaged a leading public accounting firm to support our remediation efforts.
+Added: To further remediate the material weaknesses identified herein, management, including our chief executive officer and chief financial officer, have reaffirmed and re-emphasized the importance of internal controls, control consciousness and a strong control environment.
+Added: We are committed to maintaining a strong control environment and believe that these remediation efforts represent continued improvement in our control environment.
+Added: We also expect to continue to review, optimize and enhance our financial reporting controls and procedures.
+Added: The material weaknesses will not be considered remediated until management completes the remediation plan and keeps it in place for a sufficient period of time.
+Added: The Company is committed to the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement its remediation plan for the material weaknesses, including responding as necessary to other internal or external factors that may impact execution of the plan.
Changes in Internal Control Over Financial Reporting
−Removed: No changes in our internal controls over financial reporting during the quarter ended September 30, 2023 have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
+Added: The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above.
+Added: There has been no change in the Company’s internal control over financial reporting
+Added: during the quarter ended March 31, 2024 that has materially affected or is reasonably likely to materially affect its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
PART II – OTHER INFORMATION
Legal Proceedings
−Removed: See Note 8 (Commitments and Contingencies) to the Company’s condensed consolidated and combined financial statements, above, which is incorporated herein by reference.
−Removed: For a discussion of the risks relating to our business, see the “Risk Factors” section of our Form 10 and the “Cautionary Statement Concerning Forward-Looking Statements” set forth in Part I, Item 2 of this Form 10-Q.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds
−Removed: Not applicable
−Removed: Defaults Upon Senior Securities
−Removed: Not applicable
−Removed: Mine Safety Disclosures
−Removed: Not applicable
+Added: See Note 9 - Commitments and Contingent Liabilities to the condensed consolidated and combined financial statements, above, which is incorporated herein by reference.
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.