First Data 2013 Annual Report Download - page 125


 
None.

Evaluation of Disclosure Controls and Procedures.
The Company has evaluated, under the supervision of the Company’s Chief Executive Officer and the Chief Financial Officer, the effectiveness of
disclosure controls and procedures as of December 31, 2013. This is done in order to ensure that information the Company is required to disclose in reports
that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in
SEC rules and forms.
Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures
were not effective as of December 31, 2013, due to a material weakness, described below in Management’s Report on Internal Control over Financial Reporting.
Notwithstanding the material weakness discussed below, management has concluded that the consolidated financial statements included in this form
10-K present fairly, in all material aspects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity
with accounting principles generally accepted in the United States.
Management’s Report on Internal Control over Financial Reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-
15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles.
The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All control systems have inherent
limitations so that no evaluation of controls can provide absolute assurance that all control issues are detected. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013, based on the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Framework to Internal Control Environment (1992
framework).
Management has concluded that it did not design and maintain effective controls relating to the accounting and reporting for income taxes and also
concluded that this is a material weakness in internal control over financial reporting as of December 31, 2013. Specifically, the controls in place relating to the
establishment and measurement of valuation allowances against deferred tax assets were not properly designed to provide reasonable assurance that the
Company’s income tax benefit and deferred tax assets and liabilities would be properly recorded and disclosed in the financial statements. This material
weakness was initially identified in 2012. At the time, the Company had an insufficient number of personnel with appropriate knowledge, experience or
training in accounting for income taxes. Additionally, the organizational structure resulted in incomplete or inadequate oversight and review of complex issues,
calculations and disclosures. While management has made significant progress in its remediation efforts, the material weakness has not been fully remediated
as of December 31, 2013. Although the amount of tax related adjustments recorded to the Company’s financial statements have been immaterial, the absence of
sufficient controls creates the risk that a material error would not be prevented or detected in a timely manner.
124