Company: SDHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001982518-25-000064
Chunk: 126

Company: Smith Douglas Homes Corp.
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 8
Chunk 126
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 cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. 

Remediation

In response to this material weakness in internal control over financial reporting related to ineffective ITGCs for key IT systems, the Company has taken and is continuing to take actions to remediate control failures related to user access, change management, and segregation of duties. Our remediation plan includes: 

•expanding the available resources at the Company with experience designing and implementing control activities, including ITGCs and automated controls, through hiring a Vice President, IT Operations in June 2025 and engaging third-party consultants and specialists in March 2025 to assist with executing our remediation plan;

•implementing a process for regular review of privileged access to key IT systems;

•developing new and strengthening existing IT policies and procedures;

•redesigning and implementing new ITGCs within the Company and related to our third-party service providers;

•enhancing oversight of our third-party service providers through review of relevant SOC reports;

•reassessing roles and responsibilities across key IT systems to ensure appropriate access and segregation of duties; and

•developing and implementing additional training addressing ITGCs.

Our remediation plan can only be accomplished over time and will be continually reviewed to determine that it is achieving its objectives. We are committed to maintaining a strong internal control environment, and we expect to continue our efforts to ensure the material weakness described above is remediated. However, the material weakness cannot be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

As we continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weakness described above, we have and will continue to perform additional procedures prescribed by management, including the use of manual mitigating control procedures designed to ensure that our consolidated financial statements are fairly stated in all material respects. 

Changes in internal control over financial reporting

Other than the actions to remediate the material weakness in our internal control over financial reporting as described above, which was ongoing as of the date of issuance of this Quarterly Report on Form 10-Q, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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