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Evaluation of Disclosure Controls and Procedures
−Removed: Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of April 30, 2020, the end of the period covered by this Quarterly Report on Form 10-Q.
+Added: Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of July 31, 2020, the end of the period covered by this Quarterly Report on Form 10-Q.
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it 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.
−Removed: Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated
−Removed: and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
+Added: Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
−Removed: Based on such evaluation, and subject to the below exclusion, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of April 30, 2020, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
−Removed: In accordance with interpretive guidance issued by SEC staff, companies are allowed to exclude acquired businesses from the assessment of internal control over financial reporting during the first year after completion of an acquisition and from the assessment of disclosure controls and procedures to the extent subsumed in such internal control over financial reporting (the “Internal Controls Guidance”).
−Removed: In accordance with the Internal Controls Guidance, as the Company acquired WageWorks on August 30, 2019, management's evaluation and conclusion as to the effectiveness of the Company's disclosure controls and procedures as of April 30, 2020 excluded the portion of disclosure controls and procedures that are subsumed by internal control over financial reporting of WageWorks.
−Removed: WageWorks’ assets represented approximately 10% of the Company’s consolidated total assets, excluding the effects of purchase accounting, and its revenues represented approximately 51% of the Company's consolidated total revenues, each as of and for the quarter ended April 30, 2020.
+Added: Based on such evaluation, and subject to the below exclusion, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of July 31, 2020, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
+Added: In accordance with interpretive guidance issued by SEC staff, companies are allowed to exclude acquired businesses from the assessment of internal control over financial reporting during the first year after completion of an acquisition and from the assessment of disclosure controls and procedures to the extent subsumed in such
+Added: internal control over financial reporting (the “Internal Controls Guidance”).
+Added: In accordance with the Internal Controls Guidance, as the Company acquired WageWorks on August 30, 2019, management's evaluation and conclusion as to the effectiveness of the Company's disclosure controls and procedures as of July 31, 2020 excluded the portion of disclosure controls and procedures that are subsumed by internal control over financial reporting of WageWorks.
+Added: WageWorks’ assets represented approximately 11% of the Company’s consolidated total assets, excluding the effects of purchase accounting, and its revenues represented approximately 49% of the Company's consolidated total revenues, each as of and for the quarter ended July 31, 2020.
Material Weaknesses in Internal Control over Financial Reporting
−Removed: Management determined the following material weaknesses existed as of April 30, 2020, all of which were disclosed previously by WageWorks in Item 9A of its Annual Report on Form 10-K for the year ended December 31, 2018.
+Added: Management determined the following material weaknesses existed as of July 31, 2020, all of which were disclosed previously by WageWorks in Item 9A of its Annual Report on Form 10-K for the year ended December 31, 2018.
Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities
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These material weaknesses and other deficiencies could result in a misstatement of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim condensed consolidated financial statements that would not be prevented or detected.
−Removed: Remediation Efforts
−Removed: The Company continues to assess the impact of the Acquisition on its internal control over financial reporting.
−Removed: As part of this assessment, the Company has continued working with an external specialist, has completed a detailed review of all noted controls deficiencies, and is developing a plan to address the underlying control deficiencies associated with the disclosed material weaknesses.
−Removed: The Company has also hired new leadership for its internal audit function.
−Removed: Further, the Company has begun to design and implement new control activities and enhance existing control activities related to ITGCs.
−Removed: The Company intends to begin testing these control activities once they have been fully implemented.
+Added: Integration and Remediation Efforts
+Added: The Company continues to assess the impact of the Acquisition on its internal control over financial reporting, including the impact of the integration of WageWorks into existing operations at the consolidated Company.
+Added: As part of this assessment, the Company has continued to evaluate its internal control environment to ensure that it has appropriate controls in place to mitigate the risks of a material misstatement to its consolidated financial statements associated with WageWorks.
+Added: In light of the previously disclosed material weaknesses in WageWorks’ internal control over financial reporting, the Company has continued to utilize a third-party internal controls specialist, dedicated certain senior finance and accounting leadership team members to work on remediation efforts, and continued to develop a plan to address the deficiencies associated with the disclosed material weaknesses.
+Added: In partial response to the material weaknesses associated with accounting close and financial reporting and review of new, unusual or significant transactions and contracts, the Company has incorporated certain WageWorks processes into the Company’s existing controls that address the monitoring of the accounting close cycle and the evaluation of accounting policies, including the identification, review and assessment of new, unusual or significant transactions.
+Added: Additionally, in partial response to material weaknesses in the areas of control environment, risk assessment, control activities, information and communication, and monitoring activities, the Company has incorporated certain WageWorks processes into the Company’s existing entity level controls.
+Added: The Company will continue to monitor these recently implemented changes to ensure they are operating effectively to address the above material weaknesses.
Changes in Internal Control Over Financial Reporting
−Removed: Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended April 30, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II—Other Information
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.