Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified by the U.S. Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures are not effective at a reasonable assurance level due to the material weakness described in Management’s Report on Internal Control over Financial Reporting in our Annual Report on Form 10-K for the
35
year ended December 31, 2023, which has not been fully remediated as of September 30, 2024, as well as the following material weakness identified during the quarter ended September 30, 2024:
We identified a material weakness in our risk assessment component of internal control over financial reporting that resulted in a failure to effectively design and implement sufficient internal controls related to our information technology general controls (“ITGCs”) in the areas of user access and program change-management over the information technology (“IT”) system that is utilized to support the Produce segment’s financial reporting processes. Specifically, under our existing ITGCs, we determined that there were insufficient controls to limit user access to this system and to enable oversight of changes being made to the financial inputs under this system. As a result, business process controls (automated and manual) that are dependent on and use information produced from the affected ITGCs were also deemed ineffective because they could have been adversely impacted by any inappropriate user access or financial input changes.
Notwithstanding the identification of the foregoing material weakness, we are not aware of any such inappropriate user access or financial input changes. Accordingly, this material weakness did not result in any identified misstatements to our financial statements, and there were no changes to previously released financial results.
Remediation Plan and Status
In the nine months ended September 30, 2024, the Company continued to implement a remediation plan to improve the operation of its controls over the review of the determination of the fair value of its goodwill and intangible assets, as previously described in our Annual Report on Form 10-K for the year ended December 31,2023. Management is also in the process of designing controls to ensure that control deficiencies contributing to the ITCG material weakness described above are remediated, such that these controls are designed, implemented and operating effectively. These remediation actions are ongoing and included or are expected to include:
• Enhancing risk assessment and control identification procedures for our Produce segment’s system environment;
• Enhancing existing controls and/or applying other appropriate procedures to address the design and operation of IT general controls within our Produce segment’s system environment in order to, among other things, limit user access; and
• Implementing monitoring controls around timely identification and review of system changes.
As we continue to evaluate and enhance our internal control over financial reporting, we may determine that additional measures to address the material weaknesses or adjustments to the remediation plan may be required. Once controls are designed and implemented, the controls must be operating effectively for a sufficient period of time and be tested by management in order to consider them remediated and conclude that the design is effective to address the risks of material misstatement.
Changes in Internal Control over Financial Reporting
The Company’s management, including the Chief Executive Officer and Principal Financial and Accounting Officer, has reviewed the Company’s internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), other than continuing to address the material weaknesses described above, during the nine months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
36
PART II. – OTHE R 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.