ICFR Weakness as a Risk Factor — Similarities in Companies With Ineffective Controls
Recently, Audit Analytics reviewed four companies fined by the Securities and Exchange Commission for having longstanding ineffective internal controls over financial reporting (ICFR): Grupo Simec S.A.B. de C.V., Lifeway Foods, Digital Turbine and CytoDyn.
At the time, this was thought to be a rare enforcement action, as the SEC usually doesn’t cite internal controls as the main reason for bringing charges. Audit Analytics looked deeper into the topic and found that past SEC investigations into companies with weak internal controls has itself become a risk factor. This article highlights three companies with internal control weaknesses and their common issues.