NXP Semiconductors (NXPI), which focuses primarily on the automotive industry, identified control deficiencies that make virtually all of its accounts suspect. In its latest 10-K, NXP acknowledged the associated with ineffective information technology general controls (ITGCs) in the areas of:

“...user access, change-management and IT operations over certain information technology (IT) systems that support the Company’s financial reporting processes. Management also deemed ineffective our automated and manual business process controls that are dependent on the affected ITGCs, because they could have been adversely impacted to the extent that they rely upon information and configurations from the affected IT systems.”

Though possible the misstep has resulted in material misstatements, NXP reassures the material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results. In releasing its latest annual report, NXP says it performed additional analysis to ensure reported results are accurate:

“We have concluded that our Consolidated financial statements fairly present, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented.”

While fixes are implemented, NXP’s auditor flagged the issue as a critical audit matter and provided additional detail revealing the significance of the deficiencies:

“This material weakness affects substantially all financial statement accounts.”