LINDBLAD EXPEDITIONS HOLDINGS, INC. 10-Q

ITEM 4. CONTROLS AND PROCEDURES   Evaluation of Disclosure Controls and Procedures   Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide   37     reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.   Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting, as of June 30, 2021, using the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation under the updated internal control framework in Internal Control-Integrated Framework (2013), management concluded that internal control over financial reporting were effective as of June 30, 2021.   Management has taken steps to date, as described below under “Remediation Plan,” to remediate the prior material weakness in our internal control over financial reporting identified at December 31, 2020. Management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.   Description of Material Weakness     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 our annual or interim financial statements will not be prevented or detected on a timely basis.   During our assessment of our internal controls in connection with the preparation of our 2020 Annual Report, management identified a material weakness in internal controls over financial reporting related to having inadequate documentation to evidence the review over certain accounting journal entries and account reconciliations. These control deficiencies, if not remediated, could have resulted in a misstatement to the annual or interim consolidated financial statements that would not have been prevented or detected. Accordingly, our management has determined that these control deficiencies constituted material weaknesses.   Remediation Plan   Management had previously established a comprehensive set of controls and procedures over financial reporting. However, in several instances during the year ended December 31, 2020 we noted a lack of complete compliance with these controls and procedures, specifically related to the required documentation of certain review procedures performed. Management has taken additional steps to ensure consistent compliance with those controls and procedures, as well as to ensure appropriate documentation of reviews that have taken place. Measures we have taken to remediate the prior material weakness at December 31, 2020 described above include:     ● Additional ongoing communications and training to employees across the entire organization regarding the importance of adhering to control procedures and maintaining proper documentation.         ● Enhanced communications and documentation regarding reviews of journal entries and balance sheet reconciliations in a timely manner.         ● Additional layers of examination to ensure appropriate review procedures over journal entries and balance sheet reconciliations have taken place and have been subsequently documented appropriately.         ● Exploring the ability to further leverage our information technology resources and general ledger system to enhance communication and documentation of review over journal entries and balance sheet reconciliations.   We are committed to maintaining a strong internal control environment, and we believe the measures described above have strengthened our internal control over financial reporting and remediated the material weakness we have identified.    38     Changes in Internal Control over Financial Reporting   Except as described above under Remediation Plan, there was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.     PART 2. OTHER INFORMATION   ITEM 1. LEGAL PROCEEDINGS   The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. We have protection and indemnity insurance that would be expected to cover any damages.