Lexmark 2014 Annual Report Download - page 128

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company has established disclosure controls and procedures that are designed to ensure that information required to be disclosed
in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as
such, is accumulated and communicated to the Company’s management, including our Chairman and Chief Executive Officer
(“CEO”) and Vice President and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required
disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and
procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2014. Based on their evaluation, the CEO and
CFO concluded that, due to a material weakness in our internal control over financial reporting as described below, our disclosure
controls and procedures were not effective as of December 31, 2014. In light of the material weakness in internal control over
financial reporting, we completed substantive procedures, including validating the completeness and accuracy of the underlying data
used for accounting for income taxes, prior to filing this Annual Report on Form 10-K.
These additional procedures have allowed us to conclude that, notwithstanding the material weakness in our internal control over
financial reporting, the consolidated financial statements included in this report fairly present, in all material respects, 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 of America.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.
Under the supervision and with the participation of our management, including the CEO and CFO, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2014 based upon Internal Control-Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or
detected on a timely basis.
As of December 31, 2014, we did not maintain effective monitoring and oversight of controls over the completeness, existence,
accuracy and presentation and disclosure of our accounting for income taxes, including the income tax provision and related tax assets
and liabilities. Specifically, there were errors in the reconciliation of account balances as they were not performed timely and at a level
of precision to identify errors, errors in the calculation of certain deferred tax balances and incorrect balance sheet classification and
disclosure of certain balances in the notes to the financial statements. These errors resulted in adjustments to our consolidated financial
statements as of and for the year ended December 31, 2014.
The errors arising from the underlying deficiency are not material to the financial statements reported in any interim or annual period
and therefore, did not result in a revision to previously filed financial statements. However, this control deficiency could result in
misstatements of the aforementioned accounts and disclosures that would result in a material misstatement to the annual or interim
consolidated financial statements that would not be prevented or detected in a timely manner. Accordingly, we have determined that
this control deficiency constitutes a material weakness.
Because of this material weakness, management concluded that we did not maintain effective internal control over financial reporting
as of December 31, 2014, based on criteria described in Internal Control – Integrated Framework (2013) issued by COSO.
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