Company: NEOG
Filing Date: 2025-01-15
Form Type: 10-Q
Source: 0000950170-25-005818
Chunk: 50

Company: NEOGEN CORP
Filing Date: 2025-01-15
Form: 10-Q
Item: Item 4
Chunk 50
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  to adequately support certain assumptions applied in its goodwill valuation analysis.   

Information and Communication

We did not consistently generate or provide adequate 	quality supporting information and communication based on the criteria established in the COSO Framework and we identified deficiencies in the principles associated with the information and communication component of the COSO Framework. The following were contributing factors to the material weakness in information and communication:

•Management did not maintain adequate information technology general controls in the areas of user access and change management over certain information technology systems that support the Company’s financial reporting process.

•Management did not consistently retain information and documentation to adequately support the functions of internal control, including controls over information produced by the entity used in connection with control activities. 

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•Management did not adequately communicate information internally to enable personnel to sufficiently understand internal control responsibilities.

These control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis, and therefore, we concluded that the deficiencies represent material weaknesses. As a result of these material weaknesses, management has concluded that our internal control over financial reporting was not effective as of November 30, 2024.

However, after giving full consideration to these material weaknesses, and the additional analyses and other procedures that we performed to ensure that our consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared in accordance with US GAAP, we have concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with US GAAP. 

Ongoing Remediation Efforts 

Management is in the process of implementing, and will continue to implement, measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. Our remediations actions include:

•Enhancing the design and implementation of existing control activities and developing new control activities as needed to address identified risks;

•Enhancing internal controls documentation, including retaining adequate documentary evidence for certain management review controls and maintaining evidence of precise review procedures performed to demonstrate effective operation of internal controls;

•Expanding, enhancing, and formalizing comprehensive accounting, business operations, and information technology policies and procedures; 

•Developing a training program and educating control owners concerning the principles of the Internal Control - Integrated Framework (2013) issued by COSO;

•Hiring qualified personnel and outside resources to support enhanced control ownership and internal communications, including the hiring of a full time SOX PMO