What changed in this filing

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Item 4. Controls and Procedures

2021-11-05 compared with 2021-08-06 · 27 added, 24 removed, 36 unchanged (59% of the section changed)

4 unchanged sentences

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Form 10-Q, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation with the participation of its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2021 .

Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, because of the material weaknesses in internal control over financial reporting discussed below, the Company’s disclosure controls and procedures were not effective as of June 30, 2021 , to ensure:

(i) that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

23 unchanged sentences

Remediation Plan and Efforts to Address the Previously Identified Material Weaknesses

The Company’s remediation efforts are ongoing, and it will continue its initiatives to implement and document policies and procedures, and strengthen the Company’s internal control environment.

Remediation of the identified material weaknesses and strengthening the Company’s internal control environment has required a substantial effort since 2018, and those efforts have extended into 2021.

The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

The Company expects such testing to begin in the second half of 2021 and continue through the filing of the 2021 Annual Report on Form 10-K;

however, the Company continues to monitor the impact of the COVID-19 pandemic on its remediation plan.

To remediate the material weaknesses described above, the Company, with the oversight of the Audit Committee of the Board of Directors, has been pursuing the six remediation steps as originally identified in the Company’s 2018 Annual Report on Form 10-K.

Substantial progress has been made since the inception of the remediation plan that was designed with the assistance of managements outside consultant, an internationally recognized accounting firm, and monitored by the Audit Committee.

To date, the Company has accomplished or made progress towards the following remediation steps:

To remediate the material weaknesses described above, the Company, with the oversight of the Audit Committee of the Board of Directors (“the Audit Committee”), has been pursuing the six remediation steps as originally identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Company’s remediation plan was designed with the assistance of management’s outside consultant, an internationally recognized accounting firm.

The Company continues to work with its outside consultant to assist in completing the remediation plan and believes that its remediation plan will be sufficient to remediate the identified material weaknesses and strengthen its internal control over financial reporting.

As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

To date, the Company has accomplished or made substantial progress towards the following remediation steps:

Identified material processes and significant locations for the purpose of identifying risks of material misstatement to the Company’s financial statements.

Documented significant elements of a comprehensive risk assessment and internal control gap analysis and commenced the validation thereof with key stakeholders.

Conducted interviews with relevant parties to ensure an understanding of the activities involved in the recording of transactions within material processes.

Completed a comprehensive review and update, as necessary, of the documentation of relevant processes, policies and procedures, and design of relevant controls with respect to the Company’s internal control over financial reporting.

With assistance from management’s outside consultant, the Company is in the process of making updates to processes, policies and procedures so that sufficient documentation will be available to evidence control implementation and operating effectiveness.

Evaluated the Company’s monitoring activities to ensure the components of internal control under the 2013 COSO Framework would be present, functioning and able to be appropriately evidenced.

Pursuant to this evaluation process, the Company is in the process of implementing certain enhanced controls.

With the assistance of management’s outside consultant, trained the Company’s current individual control owners with respect to control design and documentation requirements;

however, the Company continues to recruit, hire, train and retain additional skilled and experienced management personnel to fill additional roles across the organization.

The Company continues to work with its outside consultant to assist in completing the remediation plan.

The Company believes that its remediation plan will be sufficient to remediate the identified material weaknesses and strengthen its internal control over financial reporting.

The Company cannot assure you, however, when it will remediate such weaknesses, nor can it be certain whether additional actions will be required or the costs of any such actions.

Conducted company-wide interviews to ensure an understanding of the activities involved in the recording of transactions within material processes throughout the Company.

Completed a comprehensive review and update, as necessary, of the documentation of relevant processes, policies and procedures, and design of over 350 relevant controls across the organization with respect to the Company’s internal control over financial reporting, inclusive of relevant business process and information technology controls.

With assistance from management’s outside consultant, the Company is in the process of implementation of new or redesigned internal controls, including ensuring that sufficient documentation will be available to evidence the performance of the such internal controls.

Evaluated components of the Company’s internal control under the 2013 COSO Framework to ensure that controls are present, functioning and able to be appropriately evidenced.

Pursuant to this evaluation process, the Company is in the process of implementing enhanced controls pertaining to the conduct of management’s evaluation of internal controls over financial reporting.

With the assistance of management’s outside consultant and the newly created Tredegar internal control compliance office, the Company continues to conduct additional training with the individual control owners across the organization with respect to the operation of the new and redesigned controls and documentation necessary to evidence their implementation and effective operation.

Additionally, the Company continues to recruit, hire, train and retain additional skilled and experienced management personnel to fill additional roles across the organization.

To date, the Company has hired additional finance controllers for its Aluminum Extrusions business, created an assistant controller’s position at Tredegar corporate headquarters, and, reallocated roles and responsibilities of the Company’s accounting personnel, that previously supported a significant divested business, to further support its remediation objectives and ongoing operations.

The Company has also created a Sarbanes-Oxley Act of 2002 compliance group charged with monitoring the control environment and has also increased resources within its internal audit function.

The Company’s remediation efforts are ongoing, and the Company will continue its initiatives to implement and document policies and procedures and strengthen the Company’s internal control environment.

The Company previously expected the implementation of the Company’s new and revised controls to begin in the second half of 2021, with the testing of such controls to continue through the filing of the 2021 Annual Report on Form 10-K.

However, during the preparation of the Company’s financial statements for the third quarter of 2021, the Company observed that its remediation efforts have been temporarily impacted due to factors including, but not limited to, the COVID-19 pandemic, the need for additional training and turnover in positions relevant to internal controls.

As a result, the Company has concluded that remediation of the identified material weaknesses will not be completed in 2021 and more time is necessary to permit the new and redesigned controls to be implemented and operate effectively, including allowing for additional time to train control owners as part of the successful implementation of the revised system of internal controls over financial reporting.

The Company expects to complete the implementation of the new and revised controls in the first half 2022.

The Company continues to monitor the impact of employee turnover, the COVID-19 pandemic and other external factors on its remediation plan and its assessment of internal control over financial reporting.

The Company cannot assure you when it will remediate such weaknesses, nor can it be certain whether additional actions will be required or the costs of any such actions.

Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.

Changes in Internal Control Over Financial Reporting

The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above.

The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses as described above.

The implementation of the material aspects of this plan began in the second quarter of 2019.

During the quarter ended June 30, 2021 , the Company, with the assistance of its outside consultant, has made progress in its remediation plan by substantially completing the design of controls, while continuing to update processes, policies, and procedures.

Except as noted above with respect to the implementation of the remediation plan, there has been no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2021 , that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Except as noted above with respect to the implementation of the remediation plan, there has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II - OTHER INFORMATION

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-Q

Item 4. Controls and Procedures