Lumber Liquidators 2015 Annual Report Download - page 92

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), that are intended to ensure that information that
would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including the Chief Executive Officer and the Interim Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures as of December 31, 2015. Based on this evaluation,
our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and
procedures were not effective as of December 31, 2015 due to the material weakness in internal control over
financial reporting related to deficiencies in our information technology general controls described below.
Management has identified a material weakness in its internal control over financial reporting related to
information technology general controls in the area of user access. For additional information regarding the
nature of this material weakness, see ‘‘Management’s Report on Internal Control Over Financial Reporting’’
below. We have developed a remediation plan for this material weakness, which is described below under
‘‘Remediation Activities.’’
Notwithstanding the identified material weakness and management’s assessment that internal control
over financial reporting was ineffective as of December 31, 2015, management believes that the audited
consolidated financial statements contained in this Annual Report on Form 10-K fairly present, in all material
respects, our financial condition, results of operations and cash flows for the fiscal years presented in
conformity with accounting principles generally accepted in the United States of America. Additionally, this
material weakness did not result in any adjustments or restatements of the Company’s audited and unaudited
consolidated financial statements or disclosures for any prior period previously reported by the Company.
(b) 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. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated
under the Exchange Act as a process, designed by, or under the supervision of the Company’s principal
executive and principal financial officer and affected by the Company’s Board of Directors, management and
other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America. Internal control over financial reporting includes maintaining
records that in reasonable detail accurately and fairly reflect our transactions and disposition of assets;
providing reasonable assurance that transactions are recorded as necessary for preparation of our financial
statements in accordance with generally accepted accounting principles; providing reasonable assurance that
receipts and expenditures are made only with appropriate authorizations; and providing reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting is not intended to provide
absolute assurance that a misstatement of our financial statements would be prevented or 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 policies or
procedures may deteriorate.
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