RADIANT LOGISTICS, INC 10-Q

Item 4. Controls and Procedures Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports 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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act as of September 30, 2020 , was carried out by our management under the supervision and with the participation of our CEO and CFO. Based upon that evaluation, our CEO and CFO concluded that, as of September 30, 2020, our disclosure controls and procedures were not effective because of the material weakness in our internal control over financial reporting described below. Material Weakness We did not design and maintain effective internal controls over the goodwill and intangibles impairment review process. The Company identified an error in its evaluation of the annual goodwill impairment test performed as of April 1, 2020 and the interim goodwill and intangibles impairment evaluation test performed as of June 30, 2020. Specifically, we did not design and maintain effective controls to review in sufficient detail the carrying values of the Company’s reporting units for both the annual and interim goodwill impairment tests. In addition, we did not design and maintain effective controls at the proper precision level to determine whether an impairment evaluation triggering event occurred as of June 30, 2020. 33 A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. This material weakness did not result in a misstatement to the condensed consolidated financial statements. However, this material weakness could result in misstatements that would result in a material misstatement of the condensed consolidated financial statements that would not be prevented or detected. Remediation of Material Weakness We have evaluated the material weakness and begun developing and implementing a plan of remediation to strengthen our internal controls related to the control procedures applied to the goodwill and intangible asset impairment testing process. Management is in the process of developing a detailed plan for remediation of the material weakness. We have begun conducting an in depth review of our controls over the goodwill and intangibles cycle to enhance our procedures and resources related to the identification and evaluation of triggering events that can impact our impairment assessments, particularly during the periods the Company is impacted by the COVID-19 environment. We are working toward enhancing the level of precision at which our internal controls over financial reporting relating to goodwill and intangible asset impairment assessments are performed, specifically in consideration of the factors analyzed in evaluating triggering events and performing management’s qualitative impairment assessment. We are also in the process of improving our documentation to strengthen the support for the judgments applied to the impairment analyses. If deemed necessary, we will provide additional training to staff involved in the control procedures over the goodwill and intangibles cycle and/or obtain assistance from third parties. Changes in Internal Control Over Financial Reporting During the three months ended September 30, 2020 , there was no change in our internal control over financial reporting that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). PART II. OTHER INFORMATION