{ "docId": "019dd923-622c-750b-8b98-f7d835dc2a36", "docSlug": "0a3a22290f60", "documentTitle": "GFL Environmental Inc. (GFL)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-08-18 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 48, "pageCount": 106, "prevPage": 47, "nextPage": 49, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "balanced", "nDataPoints": 0, "notes": "The slide uses a yellow callout box to present a direct quote from the company's SEC filings as evidence of the contradiction.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-f7d835dc2a36/48", "deckHref": "/decks/019dd923-622c-750b-8b98-f7d835dc2a36", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-f7d835dc2a36.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-f7d835dc2a36#slide-48", "components": [ { "bbox": { "h": 0.6, "w": 0.92, "x": 0.04, "y": 0.3 }, "kind": "callout", "text": "Failure to comply with requirements to design, implement and maintain effective internal control over financial reporting could have a material adverse effect on our business and stock price. As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act (\"Section 404\"), in the United States, or National Instrument 52-109Certification of Disclosure in Issuers' Annual and Interim Filings (\"NI 52-109\"), in Canada. In connection with the audit of our consolidated financial statements, management has identified certain control deficiencies during its time as a privately-held company that together amount to a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis. During this time, we did not have in place an effective control environment with formal processes and procedures or an adequate number of accounting personnel with the appropriate technical training in, and experience with, IFRS to allow for a detailed review of complex accounting transactions, including business combinations, that would identify errors in a timely manner. In addition, we did not design or maintain effective controls over the financial statement close and reporting process in order to ensure the accurate and timely preparation of financial statements in accordance with IFRS. Subsequent to December 31, 2018, management has taken steps to address the material weakness and implement a remediation plan, which management believes will address the underlying causes. The Company has engaged external advisors to provide financial accounting assistance in the short term and we continue to evaluate and document the design and operating effectiveness of our internal controls and execute the remediation and implementation of our internal controls as required. The Company has hired a Vice President of Internal Audit and has reallocated existing senior finance personnel to focus on the design and effectiveness of our internal controls and has reallocated existing responsibilities to enhance appropriate segregation of duties where possible, establishing a more comprehensive review and approval process and implementing additional internal reporting procedures. While management believes that the steps taken to date are adequate in addressing the material weakness, the material weakness identified above cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. No assurance can be provided at this time that the actions and remediation efforts will effectively remediate the material weakness or prevent the incidence of other material weakness in the Company's internal control over financial reporting in the future.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b2e5f33f-b2a0-49bc-ae6a-063655e1120c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.94, "x": 0.03, "y": 0.0016799999999999999 }, "kind": "paragraph", "text": "From its first SEC filing on July 19th 2019 – Feb 3rd, 2020 GFL included language that pointed to a material weakness of financial controls. Yet, mysteriously this language disappeared in its final IPO prospectus in March 2020, leading investors to believe that the weakness was either remedied or did not exist.(1) Upon further investigation, including a review of GFL's Q1 and Q2 2020 results, Spruce Point finds evidence that financial control deficiencies may still exist.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bdfbaf28-e5ae-48f0-b768-8c19895b1164", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.94, "x": 0.03, "y": 0.91 }, "kind": "source-note", "text": "Source: Initial F-1 (July 2019) and F-1 (Feb 3, 2020) 1) Final Prospectus (March 2020) states \"if material weaknesses are identified\" and \"Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting which are deemed to be material weaknesses which could result in a material misstatement of our annual consolidated financial statements, our interim reports, or disclosures that may not be prevented or detected.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a00c855f-bdbc-48bb-9753-deb212f5c13e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.68, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "GFL's Material Weakness: Was It Resolved, Or Quietly Minimized?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6f9f949c-92e1-44e2-8e13-8d48ca99f06e", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "0a9ffcf1-5b21-470c-8e07-67cbb330d28f", "evidence": "The slide explicitly contrasts early disclosure of material weakness with later omission to suggest misleading investors.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }