Item 4. Controls and Procedures
Item 4. Controls and Procedures
Under
the
supervision
and
with
the
participation
of
our
management,
including
our
executive
chairman
and
our
group
chief
financial officer, we conducted
an evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as of
March 31, 2025.
We previously identified and disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the
year ended June 30, 2024,
material weaknesses (the
“Original Material Weaknesses”)
in our internal
control over financial reporting
related to: (1) information
technology general controls (“ITGCs”), specifically
insufficient risk assessment, design and
implementation, monitoring activities and
training
of
individuals
to
operate
controls
in
the
areas
of
user
access
and
program-change
management
for
certain
information
technology
systems
that
support
our
financial
reporting
processes
and
(2)
insufficient
design
and
implementation
of
controls
and
associated policies and procedures
in our annual
goodwill impairment assessment.
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 consolidated financial statements will not be prevented
or detected on a timely basis.
As a result of
insufficient time
to design, implement
and fully test controls
to ensure we
have remediated the
Original Material
Weaknesses discussed in our Annual Report on Form 10-K for our fiscal
year ended June 30, 2024 (as described
above), the executive
chairman and the
group chief financial
officer concluded
that our disclosure
controls and procedures
were not effective
as of March
31, 2025. due to the Original Material Weaknesses
described above.
Subsequent to the date of the Original Filing, including in connection with the restatement, management identified the following
material weaknesses
(the “Subsequent
Material Weaknesses”
and together
with the
“Original Material
Weaknesses”,
the “Material
Weaknesses”) in the
Company’s internal
control over financial reporting:
●
Our
Consumer
lending
process,
specifically
insufficient
risk
assessment
and
monitoring
activities
relating
to
changes
in
systems
and
processes,
insufficient
controls
over
internal
information
and
information
from
service
organizations,
and
insufficient
design
and
implementation
of
information
technology
general
controls
(“ITGCs”),
controls
over
service
organizations and process level controls,
resulting in ineffective process level
controls, including a lack of validation
of the
completeness and accuracy of information used within the process;
●
Our payroll process, specifically
insufficient risk assessment
and monitoring activities relating
to changes over the
transfer
of
ownership
to
the
centralized
payroll
processes,
insufficient
controls
over
information
from
service
organizations,
and
insufficient design and implementation of ITGCs, controls over service organizations and process level controls resulting in
ineffective process level controls including a lack of validation of
the completeness and accuracy of information used within
this process;
●
Our
annual
goodwill
impairment
process,
specifically
related
to
insufficient
risk
assessment
and
ineffective
design
and
implementation of controls resulting in ineffective process level
controls;
●
Our business
combination process,
specifically insufficient
risk assessment
and ineffective
design and
implementation of
controls
over the
purchase price
allocation of
the Adumo
and Recharger
acquisitions including
insufficient
controls over
information resulting in ineffective process level controls including a lack of validation of the completeness and accuracy
of
information used;
●
Our
revenue
recognition
process
relating
to
prepaid
airtime
sold
and
processing
fees
relating
to
certain
agreements,
specifically insufficient risk assessment and ineffective design and implementation of
controls related to our judgement over
revenue recognized either as principal versus as agent resulting in ineffective
process level controls;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls including
insufficient controls
over information
resulting in
ineffective process
level controls
including a
lack of
validation of the completeness
of the journal entry
population and a lack of
validation of the completeness
and accuracy of
information used within the process; and
●
An insufficient number of experienced and trained resources to execute
on their internal control responsibilities resulting in
ineffective
design, implementation
and operating
effectiveness of
process level
controls for
processes in
the scope
of our
internal control over financial reporting evaluation.
Of the
material weaknesses
described above,
the material
weaknesses related
to the
revenue recognition
process resulted
in a
material corrected misstatement for the
year ended June 30,
2025 and a restatement for
each of the quarters
ended September 30, 2024,
December 31,
2024 and
March 31,
2025 of
our revenue
and cost
of goods
sold, IT
processing, servicing
and support,
exclusive of
depreciation and amortization. There
was no impact on the
Company’s reported
operating income (loss), net
loss or loss per share
in
any of such quarters. For
further information on the restatement,
refer to the section
titled " Restatement of
Previously Issued Financial
Statements” in Note
1 to the
unaudited interim
condensed consolidated
financial statements
as of and
for the three
and nine months
ended March 31, 2025. included in this Form 10-Q/A.
Of the material weaknesses described above, the material weaknesses
related to the annual goodwill impairment process resulted
in
a
corrected
material
misstatement
and
a
corrected
immaterial
misstatement
of
goodwill
and
impairment
loss in
the
Company’s
consolidated financial statements for the year ended June 30, 2025
.
78
Of the material weaknesses described above, the
material weaknesses related to the journal entry process
resulted in a corrected
immaterial misstatement
to our
revenue and
cost of
goods sold,
IT processing,
servicing and
support, exclusive
of depreciation
and
amortization in the Company’s consolidated
financial statements for the year ended June 30, 2025.
Of the material weaknesses described above, the material weakness related to an insufficient
number of experienced and trained
resources to
execute on
their internal
control responsibilities
also resulted
in a
corrected material
misstatement of
current and
long-
term borrowings in the Company’s
consolidated financial statements for the year ended June 30, 2025.
All
other
material
weaknesses
did
not
result
in
any
corrected
material
or
immaterial
misstatements,
however
a
reasonable
possibility exists that material misstatements in the Company’s consolidated financial statements may not be prevented or detected on
a timely basis.
Subsequent to
the date of
the Original Filing
and as a
result of the
Subsequent Material Weaknesses
in the Company's
internal
control over
financial reporting
discussed above,
our management,
with the
participation of
our executive
chairman and
our group
chief
financial
officer,
concluded
that,
as
of
March
31,
2025.,
our
disclosure
controls
and
procedures
were
not
effective
at
the
reasonable assurance level due to the Subsequent Material Weakness
described above.
Notwithstanding
the
previously
identified
Material
Weaknesses,
management
believes
the
condensed
consolidated
financial
statements included in this Quarterly Report on Form 10-Q/A fairly present, in all material respects, our financial condition, results of
operations and cash flows as of and for the periods presented in accordance with
GAAP.
Remediation of Subsequent Material Weaknesses
To address the material weaknesses, our management,
including our Information Technology
(“IT”) team, has commenced with
remediation of these material
weaknesses including, but not
limited to: (1) developing
and implementing a comprehensive
remediation
plan that includes specific actions aimed at enhancing the
understanding of control owners related to the operation and
importance of
internal
controls
over
financial
reporting,
including
the principles
and
requirements
of
each control,
with
a focus
on
the impacted
processes,
including
controls
over
service
organizations,
ITGCs
and
other
process
level
controls;
(2)
mandating
improved
risk
assessment
procedures
with governance
requirements
upon implementing
new systems
within the
Group together
with the
design,
implementation and monitoring
of control activities;
(3) the recruitment
of additional appropriately
skilled resources across
the Finance
and
Risk
and
Compliance
disciplines
coupled
with
the
further
upskilling
and
training
of
existing
resources
responsible
for
the
execution
of
key
controls
as
well
as
a
focus
on
a
greater
degree
of
automation
of
controls
throughout
the
organization,
(4)
the
embedding of
controls compliance
in the
key performance
indicators of
senior executives
across the
business and
(5) collaborating
closely with internal and external assurance partners to ensure the robustness of
our remediation plan.
While we are actively taking steps to implement our remediation
plan, the Subsequent Material Weaknesses
will not be deemed
resolved until
the enhanced
controls operate
for a
sufficient period
of time
and management
has confirmed
through testing
that the
same are operating effectively.
We will
continue to monitor the
remediation plan's effectiveness
and adjust our efforts
as needed. As
we assess and test our
internal control over
financial reporting, we may
identify the need for
additional measures or modifications
to
the plan.
Remediation of Original Material Weaknesses
Management has,
however, made
progress in remediating
the material weaknesses
identified in the
previous fiscal year
related
to the failure of
specific ITGCs for certain
IT systems to operate
effectively as well
as the insufficient
design and implementation
of
controls and policies
and procedures
related to the
goodwill impairment
assessment. As a
result, controls
in the areas
of user access
and
program-change
management
for
associated
IT
systems
that
support
our
financial
reporting
processes
have
been
remediated.
Revised procedures
have been
implemented related
to the
validation of
completeness and
accuracy of
the data used
in the
goodwill
impairment model together with additional procedures implemented to enhance the precision levels in evaluating certain assumptions
utilized in this model. Even though the controls for the goodwill impairment process have been strengthened,
it has not yet been fully
remediated as model errors persisted.
The remediation plan with respect to the Material Weaknesses
may be adjusted as is appropriate, as we continue to evaluate and
enhance our
internal control
over financial
reporting. Other
than the
design and
implementation of
the remediation
plan, there
have
not
been
any
changes
in
our
internal
control
over
financial
reporting
during
the
fiscal
quarter
ended
March
31,
2025.,
that
have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting
79
Part II. Other Information
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.