The purpose of our research is to understand the challenges related to internal controls over financial reporting companies faced at the time of their initial registration for new securities. Our scope included IPOs (including SPAC transactions) for U.S. companies listed on the NYSE or NASDAQ (excluded foreign private issuers) that closed between January 1, 2021 and December 31, 2021.
Issues contributing to material weaknesses
Lack of accounting resources and expertise
Inadequate/lack of formal policies and procedures
Inadequate Control Design/Lack of Control
Segregation of duties issue
Material/numerous audit or YE adjustment
Control not operating effectively
Material weaknesses reported were often the result of more than one overlapping issue/challenge.