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Evaluation of Disclosure Controls and Procedures
−Removed: As of December 31, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
−Removed: Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
+Added: As of June 30, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
+Added: Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report, due to a material weakness identified in the fourth quarter of fiscal year 2024 that has not yet been remediated.
+Added: Two of the material weaknesses identified in the fourth quarter of fiscal year 2024 were remediated in the first quarter of fiscal year 2025.
+Added: The material weaknesses are described further below.
Prior Year Material Weaknesses
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As disclosed in Part II Item 9A.
−Removed: "Controls and Procedures" in our annual report on Form 10-K for the year ended March 31, 2023, during fiscal year 2023 we identified two material weaknesses in internal controls:
−Removed: Fair Value Calculations - Management's review controls over fair value calculations including Management's preliminary valuation of the Belyntic acquisition were insufficient.
−Removed: Specifically, Management failed to utilize resources with an appropriate level of knowledge and expertise in performing and reviewing the fair value calculations including the preliminary Belyntic valuation.
−Removed: Goodwill Impairment Assessment - Management's review controls over the qualitative assessment of goodwill impairment were insufficient to identify potential impairment triggers.
+Added: "Controls and Procedures" in our annual report on Form 10-K for the year ended March 31, 2024, during fiscal year 2024 we identified three material weaknesses in internal controls:
+Added: Controls over technical accounting for complex and non-routine transactions - We did not have adequate supervision and review controls over complex technical accounting related to non-routine goodwill impairment transactions and related analyses.
+Added: Controls over determining the useful lives of our recently acquired intangibles - During the GKE acquisition's measurement period, we selected a useful life over which to amortize acquired customer relationships, but there was evidence that a longer useful life may be appropriate.
+Added: Certain controls related to change management and logical access controls related to our enterprise resource planning tool, part of our information technology general controls set, were not operating effectively for a portion of the year ended March 31, 2024.
+Added: The failure of these information technology general controls extended to automated application controls across portions of financial reporting and business transaction cycles which rely upon the affected information technology application controls.
Remediation Status for Material Weaknesses in Internal Control Over Financial Reporting
Beginning during the three months ended June 30, 2024, we implemented our previously-disclosed remediation plans:
−Removed: Fair Value Calculations - We obtained the services of a knowledgeable third-party valuation specialist to perform the fair value calculations for the Belyntic acquisition.
−Removed: Goodwill Impairment Assessment - Members of Management with requisite knowledge performed a formal quarterly analysis of potential impairment triggers.
−Removed: As a result of our control activities, we have concluded that the material weakness regarding fair value calculations was remediated as of June 30, 2023, and the material weakness regarding goodwill impairment assessments was remediated as of September 30, 2023.
−Removed: We will continue to perform formal quarterly impairment trigger analyses in future periods.
−Removed: We will likewise continue to utilize a valuation specialist with the requisite knowledge to perform valuations for all future acquisitions of businesses, as such acquisitions occur.
+Added: Technical accounting for complex and non-routine transactions - We executed two transactions during the first quarter of our fiscal year 2025, partial repurchases of the Notes and the amendment and modification of our Credit Facility, which met our definition of complex technical accounting matters for which we should obtain technical accounting support from an outside expert.
+Added: We identified and selected qualified third-party advisors, including validation that that the advisors possessed adequate knowledge to address the complexities of the applicable technical accounting matters;
+Added: and ensured analyses were appropriately reviewed, ensuring consensus on accounting conclusions.
+Added: Following the execution of our remediation plan for these transactions, management management has concluded that the material weakness has been remediated.
+Added: Assessment of useful lives of recently acquired intangibles - We modified the useful life of our customer relationship intangible and recorded an immaterial cumulative effect true-up to release amortization expense during the three months ended June 30, 2024.
+Added: Following the execution of our remediation plan related to the useful lives of recently acquired intangible assets, management has concluded that the material weakness has been remediated.
+Added: Information technology general controls - Management modified the reports used as source data to test change management controls in our enterprise resource planning tool and has established new controls to enhance our review of roles, particularly roles with the ability to add, edit or delete transactions.
+Added: An insufficient number of quarters has elapsed to affirm remediation of the material weakness regarding information technology general controls;
+Added: we will continue to perform our reviews in future quarters.
Changes in Internal Control Over Financial Reporting
−Removed: The GKE acquisition was completed during the three months ended December 31, 2023.
+Added: We acquired GKE during the third quarter of our fiscal year ended March 31, 2024.
As such, the scope of our assessment of our internal control over financial reporting does not yet include GKE.
−Removed: This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.
−Removed: Other than the remediation measures discussed above, during the three and nine months ended December 31, 2023 there were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
+Added: This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope for one year from the date of acquisition.
+Added: The Company's total assets as of June 30, 2024 include $113,500 of assets held by GKE.
+Added: The Company's consolidated revenues for the three months ended June 30, 2024 include $6,300 from GKE.
+Added: Other than as discussed above, during the three months ended June 30, 2024 there were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Other Information
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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.