|TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017|
Changes in Internal Control over Financial Reporting
These material weaknesses originated in the prior year, accordingly there have been no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.
The Company continues to work to strengthen its internal control over financial reporting. We are committed to ensuring that such controls are designed and operating effectively. Our Board and management take internal controls over financial reporting and the integrity of the Company's financial statements seriously and believe that the remediation steps described below are essential to establishing and maintaining strong and effective internal controls over financial reporting and addressing the root causes that contributed to the material weaknesses identified. The following actions and plans have been or are currently in process of being implemented:
The Company has increased communication and training to employees and the Board regarding the ethical values of the Company and the requirement to comply with laws, rules, regulations, and Company policies, including the Code of Conduct and Ethics policy, and the importance of accurate and transparent financial reporting. In addition, the Company will implement a process to ensure that all employees annually confirm compliance with the Code of Conduct and Ethics policy and that deviations are identified and timely remediated. Further, the Company has also established a separate whistleblower hotline and has communicated the purpose and existence of the hotline to all employees.
The Board has implemented an internal audit function and is in the process of developing a risk based plan that will monitor the Company’s adherence to its policies and procedures including, without limitation, those policies and procedures related to any areas of concern or emphasis that the Board has identified as part of its oversight.
The Company has created a separate stand-alone corporate organization independent of SunEdison, including, among other things, directly hiring employees and retaining contractors and establishing our own human resources and accounting functions, including a cloud-based SaaS accounting system. The Company is also working to establish information technology and other critical systems and infrastructure separate from SunEdison.
The Company has and will continue to provide ongoing training for dedicated resources with assigned responsibility and accountability for financial reporting processes and internal controls.
The Company has implemented an annual financial control risk assessment process and is in the process of implementing a regularly recurring fraud risk assessment process focused on identifying and analyzing risks of financial misstatement due to error and/or fraud, including management override of controls.
Management review controls are being reassessed to determine the appropriate level of precision required to mitigate the potential for a material misstatement. In addition, the Company is enhancing the design and implementation and supporting documentation over management review controls to make clear: (i) management’s expectations related to transactions that are subject to such controls; (ii) the level of precision and criteria used for investigation; and (iii) evidence that all outliers or exceptions that should have been identified are investigated.
The Company is implementing effective information and communication processes to ensure the organization internally communicates information, including objectives and responsibilities for internal control, necessary to timely support the functioning of internal controls over financial reporting.
These remediation efforts are in each case independent of SunEdison or with a minimized level of SunEdison involvement. We expect the implementation of our remediation plan and our continuing efforts to separate from SunEdison to result in significant improvements to our internal control over financial reporting.
Item 9B. Other Information.