What changed in this filing

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Item 9A. Controls and Procedures

2020-12-23 compared with 2019-12-16 · 39 added, 31 removed, 126 unchanged (36% of the section changed)

2 unchanged sentences

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s SEC reports was recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2020, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.

Based on this evaluation, management concluded as of September 30, 2019 that, due to the material weakness in our internal control over financial reporting, which is described below, our disclosure controls were not effective in ensuring that information required to be disclosed in the Company’s SEC reports was recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, management concluded that our disclosure controls were not effective as of September 30, 2020 due to the material weakness in our internal control over financial reporting, as described below.

Notwithstanding the identified material weakness described below, management does not believe that these deficiencies had an adverse effect on our reported operating results or financial condition and management has determined that the financial statements and other information included in this report and other periodic filings present fairly in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

The Company's internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.

3 unchanged sentences

If the Company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved controls, or if the Company experiences difficulties in their implementation, the Company's business and financial results could be harmed, and the Company could fail to meet its financial reporting obligations.

Notwithstanding the identified material weakness described below, our management does not believe that these deficiencies had an adverse effect on our reported operating results or financial condition and management has determined that the financial statements and other information included in this report and other periodic filings present fairly in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

In response to the COVID-19 pandemic, a number of employees intermittently began working remotely during the second half of fiscal 2020.

We monitored and assessed the changing business environment resulting from COVID-19 on our internal controls to minimize the impact on their design and operating effectiveness.

Management has taken measures to ensure that our disclosure controls and procedures and internal controls over financial reporting were not materially affected during this period.

Management’s Report on Internal Control over Financial Reporting

1 unchanged sentence

In making this assessment, our management used the criteria for effective internal control over financial reporting described in the 2013 “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management has determined that due to the material weaknesses described below, our internal control over financial reporting was not effective as of September 30, 2019.

Based on this assessment, management has determined that due to the material weakness described below, our internal control over financial reporting was not effective as of September 30, 2020.

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 financial statements will not be prevented or detected on a timely basis.

The Company identified the following material weakness:

Key controls around segregation of duties and periodic access reviews within IT general and application controls for the Cleveland operation were not designed nor operating effectively.

• Insufficient review of specific controls associated with revenue, inventory and income taxes at the Maniago location.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting

1 unchanged sentence

To address the material weakness identified in our control environment, the Company is taking the following actions to remediate the material weakness:

Implement robust security and access reviews at a level of precision necessary to ensure they are timely and appropriate.

The Company is making progress by utilizing external assistance.

Using a risk-based approach, management will implement detective and monitoring business process controls to further mitigate IT risks over financial reporting.

With the oversight of senior management and the Company's Board of Directors, the Company continues to take steps and additional measures to remediate the underlying causes of the identified material weakness, including but not limited to (i) evaluating our information technology systems or invest in improvements to our technology sufficient to generate accurate, transparent, and timely financial information, and (ii) continue to strengthen organizational structure by holding individuals accountable for their internal control responsibilities.

• Using a risk-based approach, management will implement additional monitoring controls through increased oversight and training local management to execute additional controls in detecting material errors.

• External resources with specialized knowledge and expertise, where appropriate, will be engaged and utilized and additional review controls will be instituted to prevent and detect material errors on a timely basis.

With the oversight of senior management and the Company's Board of Directors, the Company continues to take steps and additional measures to remediate the underlying causes of the identified material weakness, including but not limited to (i) engaging subject matter experts on an as need basis to assist management in generating accurate, transparent, and timely financial information, and (ii) continue to strengthen organizational structure including holding individuals accountable for their internal control responsibilities.

Although we expect to make meaningful progress on our remediation plan during fiscal year 2021, we cannot estimate how long it will take to complete the process or the costs of actions required.

1 unchanged sentence

Changes in Internal Control over Financial Reporting and other Remediation

As of September 30, 2019, management has designed and implemented additional controls to remediate the previously reported material weaknesses in Item 9A on Form 10-K for the fiscal year ended September 30, 2018 and in Item 4 on Form 10-Q for the third quarter ended June 30, 2019.

Key controls around segregation of duties and periodic access reviews within IT general and application controls for domestic operations were not designed nor operating effectively.

Key controls within IT processes were not designed and operating effectively at Maniago.

Review controls related to certain accounting matters with manual calculations and financial statement disclosures related to a recently adopted accounting pronouncement were not sufficiently precise in detecting material errors.

Management, with the oversight of the Audit Committee, took the following steps as part of our remediation efforts:

Implemented a risk based and manual approach to remediate previously reported material weakness surrounding the lack of periodic user access review and segregation of duties of IT general controls at our facilities in Orange, California and Maniago, Italy.

Additional review controls related to certain accounting matters with manual calculations and financial statement disclosures were implemented to ensure they were precise in detecting material errors in a timely manner.

Given the remediation efforts noted above, testing of applicable controls completed during the fourth quarter and the determination that controls are designed and operating effectively, management has concluded that the material weaknesses set forth above have been remediated as of September 30, 2019.

There have been no changes in the Company's internal controls over financial reporting during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting, except as discussed above.

As of September 30, 2020, management remediated the outstanding material weaknesses as noted below:

• Key controls around segregation of duties and periodic access reviews within IT general and application controls for the Cleveland operation were not designed nor operating effectively.

Management concluded that the previously reported material weakness related to ineffective controls around segregation of duties and periodic access reviews within IT general and application controls for the Cleveland location was remediated.

During fiscal 2020, management completed remediation efforts by designing controls and testing operating effectiveness and implementing detective and monitoring business process controls to further mitigate IT risks over financial reporting.

No material changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

4 unchanged sentences

The Company has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

The Code of Ethics is applicable to, among other people, the Company’s Chief Executive Officer, Chief Financial Officer, who is the Company’s Principal Financial Officer, and to the Corporate Controller, who is the Company’s Principal Accounting Officer.

The Code of Ethics is applicable to, among other people, the Company’s Chief Executive Officer, Chief Financial Officer, who is the Company’s Principal Financial Officer, and Principal Accounting Officer.

The Company’s Code of Ethics is available on its website:

4 unchanged sentences

The following table sets forth information regarding Common Shares to be issued under the Company’s equity compensation plans as of September 30, 2020.

Plan category

Plan category Number of

securities to

options, warrants and rights

options, warrants and rights Weighted-

options, warrants and rights Number of

available for

Equity compensation plans approved by security holders:

2016 Plan (1)

2016 Plan (1) 371,148 N/A 588,795

(1) Under the 2016 Plan, the aggregate number of common shares that are available to be granted is 1,196,401 shares, with a further limit of no more than 50,000 shares to any one person in any twelve-month period.

47 unchanged sentences

Long-term incentive plan restricted share award, filed as Exhibit 10.7 to the Company's Form 10-Q dated May 16, 2016, and incorporated herein by reference

Award agreement between the Company and Peter W.

Knapper, dated June 16, 2016, effective June 29, 2016, filed as Exhibit 10.1 to the Company's Form 8-K dated June 17, 2016, and incorporated herein by reference

10.7 Credit Agreement, dated August 8, 2018, by and among SIFCO Industries, Inc.

9 unchanged sentences

Long-term incentive plan restricted share award, filed as Exhibit 10.16 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference

Amended and Restated Relocation Agreement, dated February 15, 2018, by and between SIFCO Industries, Inc.

and Peter Knapper, filed as Exhibit 10.1 to the Company's Form 8-K dated February 15, 2018, and incorporated herein by reference

10.12 Change in Control Agreement and Separation Agreement between the Company and Thomas R.

6 unchanged sentences

10.18 Fourth Amendment to Credit Agreement, dated March 29, 2019, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated September 24, 2019

10.19 First Amendment to the SIFCO Industries, Inc.

2007 Long-term Incentive Plan (Amended and Restated as of November 16, 2016) filed as Exhibit A of the Company's Definitive Proxy Statement dated December 16, 2019, and incorporated herein by reference

10.20 Promissory Note, dated April 10, 2020, by and between SIFCO Industries, Inc.

and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated April 13, 2020, and incorporated herein by reference

*10.21 Form of SIFCO Industries, Inc.

Long-term incentive plan restricted share award, incorporated herein

14.1 Code of Ethics, filed as Exhibit 14.1 of the Company’s Form 8-K dated February 6, 2018, and incorporated herein by reference

8 unchanged sentences

(i) Consolidated Statements of Operations for the years ended September 30, 2020 and 2019, (ii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2020 and 2019, (iii) Consolidated Balance Sheets at September 30, 2020 and 2019, (iv) Consolidated Statements of Cash Flow for the years ended September 30, 2020 and 2019, (vi) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2020 and 2019 and (v) the Notes to the Consolidated Financial Statements.

*104 Cover Page Interactive Data File:

the cover page XBRL tags are embedded within the Inline XBRL document and are contained with Exhibit 101

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

6 unchanged sentences

/s/ Norman E.

Chairman of the Board

President and Chief Executive Officer

Chairman of the Board President and Chief Executive Officer

(Principal Executive Officer)

/s/ Jeffrey P.

/s/ Donald C.

Gotschall /s/ Donald C.

Gotschall Donald C.

Director Director

/s/ Alayne L.

Reitman /s/ Mark J.

Reitman Mark J.

Director Director

/s/ Hudson D.

/s/ Thomas R.

Chief Financial Officer

Smith /s/ Thomas R.

Smith Thomas R.

Director Chief Financial Officer

(Principal Financial Officer)

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.

What changed 10-K

Item 9A. Controls and Procedures