A material weakness in internal control is defined as a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by errors or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. While the Company's internal control environment is heavily influenced by limited working capital, lack of separation of duties due to a limited number of employees, and the need for a full time Chief Financial Officer; the results of the independent counsel's investigation did not disclose any material weaknesses in internal control.
Recommendations resulting from the investigation and control review process include: (i) conducting further review of existing sign-off and review procedures, (ii) documenting control protocols for critical accounting spreadsheets and (iii) increase management's review of key financial documents and records. Additionally, the Company should seek to engage additional accounting personnel including a permanent Chief Financial Officer as soon as working capital permits.
Terry L Kinder, CPA, Chair of the Ad Hoc Committee, said, "All of the allegations and the Committee's findings, and conclusions, were shared with the Company's auditors, EisnerAmper, LLP, and our SEC counsel." He continued, "EisnerAmper audited the Company's financial statements for the year ended December 31, 2011 and will be conducting an audit of our financial statements for December 31, 2012."
New Leaf's CEO, and current CFO, David N. Fuselier, stated, "We intend to hire a Chief Financial Officer by the end of the second quarter 2013, or June 30, 2013."
New Leaf Brands, Inc. (