Business Context and Reporting Period
Company: AngioDynamics, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 17, 2017
Subject: Notification of a material weakness in internal control over financial reporting identified by former auditor PricewaterhouseCoopers LLP (PwC) following a PCAOB inspection.
Key Financial Metrics
This filing does not contain revenue, profit, cash flow, margin, debt, or liquidity figures. The report focuses exclusively on internal control deficiencies and remediation efforts.
Material Changes and Findings
- Material Weakness Identified: PwC determined that internal controls over financial reporting were not effective as of May 31, 2016.
- Root Cause: The Company failed to design and maintain effective controls to review cash flow projections and significant valuation model assumptions used in the annual goodwill impairment test as of December 31, 2015.
- Financial Impact: The material weakness did not result in a misstatement of the consolidated financial statements for the year ended May 31, 2016, or any interim periods in 2016 and 2017.
- Remediation Status: Management concluded that the material weakness was remediated as of May 31, 2017.
Management Commentary and Future Actions
Management, in consultation with PwC and the Audit Committee, determined that the Management's Report on Internal Control over Financial Reporting in the 2016 Form 10-K can no longer be relied upon. To address this, the Company will issue:
- A Form 10-K/A for the fiscal year ended May 31, 2016, to revise the auditor's opinion and management's report on internal controls.
- Form 10-Q/A filings for the first three quarters of fiscal year 2017 to revise evaluations of disclosure controls and procedures.
Remediation Actions Taken:
- Updated the annual goodwill impairment test control to include detailed procedures for cash flow projections and valuation model assumptions.
- Prepared sufficient and appropriate detailed documentation for the goodwill impairment test performed as of December 31, 2016.
Investor Verification Checklist
- Verify the issuance of the Form 10-K/A for the fiscal year ended May 31, 2016.
- Confirm the release of amended Form 10-Q filings for the first three quarters of fiscal 2017.
- Review the updated internal control procedures regarding goodwill impairment testing in future filings.
- Monitor for any restatements of financial data, although the current filing states no misstatements occurred.