AZZ, Inc. (AZZ) Reveals of Lack of Internal Controls
According to the class action complaint against the company for alleged violations of the Securities Exchange Act of 1934, throughout the relevant period, AZZ filed its quarterly reports on Form 10-Q, touting revenues in the hundreds of millions and net income in the tens of millions. In each of its Form 10-Q’s, AZZ failed to disclose that its internal control over financial reporting was not effective due to the Company’s improper implementation of ASC 606, resulting in improper revenue reconciliations. These issues became public knowledge on May 17, 2019, when AZZ disclosed in its Form 10-K that it had a material weakness in its internal control over financial reporting related to its revenue reconciliations. On October 11, 2019, AZZ filed a Notification of Late Filing with the SEC stating it needed “additional time to finalize its income tax accounting for the quarter, which been impeded by an ongoing analysis of certain historical deferred tax balances.” Following this filing, on October 25, 2019, AZZ announced its Chief Accounting Officer’s departure effective by the end of the month. By the end of the class period, AZZ’s stock price had fallen 17% to close at $37.12 per share and has yet to recover.
