Hertz 2014 Annual Report Download - page 36

Table of Contents
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and the interim periods within 2013. We have also restated our financial results for the year ended December 31, 2011, as reflected in Item 6,
"Selected Financial Data." These restatements, and the misstatements that necessitated our review of our financial statements, have been time-
consuming and expensive and could expose us to a number of additional risks that could materially adversely affect our financial position, results
of operations and cash flows.
In particular, we have incurred significant expenses, including audit, legal, consulting and other professional fees and lender and noteholder
consent fees, in connection with the restatement of our previously issued financial statements and the ongoing remediation of weaknesses in our
internal control over financial reporting. We have taken a number of steps, including adding significant internal resources and implemented a
number of additional procedures, in order to strengthen our accounting function and attempt to reduce the risk of additional misstatements in our
financial statements. To the extent these steps are not successful, we could be forced to incur additional time and expense. Our management’s
attention has also been diverted from the operation of our business in connection with the restatements and ongoing remediation of material
weaknesses in our internal controls.
We are also subject to a number of claims, investigations and proceedings arising out of the misstatements in our financial statements, including
investigations by the New York Regional Office of the SEC and a state securities regulator. See “The restatement of our previously issued
financial results has resulted in government investigations and could result in government enforcement actions and private litigation.”
      
                    

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f)
under the Exchange Act. In Item 9A, "Controls and Procedures” of this Annual Report, management identified material weaknesses in our internal
control over financial reporting.
As a result of the material weaknesses, our management concluded that our internal control over financial reporting was not effective as of
December 31, 2014. The assessment was based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013. We are actively engaged in developing a remediation plan designed to address
the material weaknesses, but our remediation efforts are not complete and are ongoing. If our remedial measures are insufficient to address the
material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, it
may materially adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner. If we are
unable to report our results in a timely and accurate manner, we may not be able to comply with the applicable covenants in our financing
arrangements, and may be required to seek additional waivers or repay amounts under these financing arrangements earlier than anticipated,
which could adversely impact our liquidity and financial condition. Although we continually review and evaluate internal control systems to allow
management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our
internal control over financial reporting. The next time we evaluate our internal control over financial reporting, if we identify one or more new
material weaknesses or are unable to timely remediate our existing weaknesses, we may be unable to assert that our internal controls are
effective. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting
firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and
completeness of our financial reports, which would have a material adverse effect on the price of our common stock and possibly impact our
ability to obtain future financing on acceptable terms. We may also lose assets if we do not maintain adequate internal controls.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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