Aurora Cannabis: “Material Weaknesses” Exist In Firms Internal Control Framework

Aurora Cannabis (TSX: ACB) (NYSE: ACB) this morning issued a press release identifying that it would be releasing its fourth quarter and full year financial statements on September 22, 2020. This was curious, given that the company had already announced this last week, when it was announced that over $1.8 billion in writedowns would be occurring.

As it turns out, the company took the opportunity to quietly release to the market that it has identified that the company has discovered certain material weaknesses within the firms internal control framework. The weakness in internal controls was discovered via the firm having to conduct internal assessments of its controls as a result of now being required to comply with the Sarbanes-Oxley Act.

The Sarbanes-Oxley Act, also known as SOX, is an act that was implemented in 2002 for expanded compliance from large public companies within the US. The document effectively requires stronger audits of financial information, and certain disclosures to be made.

Section 404 of this act specifically requires annual reports of public issuers to contain an assessment of internal controls on financial reporting. This is where Aurora Cannabis has indicated that its controls have “material weaknesses.” The weaknesses have been blamed on “a number of significant changes to the company during the fiscal year,” which is said to include the transformation plan. Aurora has indicated that it is already working to correct the deficiencies discovered.

These material weaknesses are expected to be released within the annual filings to be made by Aurora on September 22.

Aurora Cannabis last traded at $6.98 on the NYSE.

Information for this briefing was found via Sedar and Aurora Cannabis. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.