Company: HFFG
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001680873-25-000006
Chunk: 23

Company: HF Foods Group Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 9A
Chunk 23
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 control activities, (4) information and communication, and (5) monitoring activities to prevent or detect material misstatements to the financial statements and assess whether the components of internal control were present and functioning properly. These deficiencies were primarily attributed to an insufficient number of qualified resources to support and provide proper oversight and accountability over the performance of controls.

These entity-level material weaknesses resulted in the following specific material weaknesses:

•Information Technology (IT) General Controls - We did not design and maintain effective information technology general controls over logical access, program change management, and segregation of duties for key IT systems. As a result, certain business process controls that are dependent upon information from these systems were also not effective. Additionally, we did not design and maintain effective controls over the implementation of new IT systems.

•Financial Reporting - We did not properly design or maintain effective controls over the financial reporting process to enable timely reporting of complete and accurate financial information. We did not design and implement certain review controls with a sufficient precision to prevent or detect a material misstatement, did not consistently perform sufficient review of journal entries, or consistently retain adequate supporting documentation for financial statement balances and the related footnote disclosures. Additionally, we did not design and maintain effective controls over 

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certain non-routine transactions or significant management estimates, including the review of underlying data and assumptions for completeness and accuracy.

Remediation Activities

In response to these material weaknesses, with oversight from the Audit Committee of the Board of Directors, we have continued to implement measures to improve our internal control structure. Specifically, we have:

•Internal Controls and Leadership

◦Accounting, Internal Audit & IT teams

▪Hired a new CFO in May 2024 with public company experience to execute the finance and accounting transformation planned approach.

▪Hired new Head of Internal Audit in September 2024 and engaged ITGC and business process control experts to assist the company in remediation efforts. 

▪Hired a new VP, Corporate Controller in February 2025 with extensive experience in internal controls over financial reporting at publicly traded companies and material weakness remediation efforts.

▪Promoted a VP, Operations who brings 20+ years of industry and operational control standardization experience to lead transformation initiatives. 

◦Oversight & Governance

▪Established a cross functional Remediation Steering Committee, chaired by the new CFO, to set strategic direction.

▪Developed a detailed, integrated remediation approach, ensuring senior leadership across all functions (i.e. Accounting, IT, Finance, Operations