Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Weatherford International Ltd./Switzerland | d383500d8k.htm |
| EX-99.1 - PRESS RELEASE - Weatherford International Ltd./Switzerland | d383500dex991.htm |
| ©
2012 Weatherford. All rights reserved.
Material Weakness Remediation Update
Weatherford International
July 24, 2012
Exhibit 99.2 |
| 1
©
2012 Weatherford. All rights reserved.
Contents
1.
The Goal
2.
Actions in the First Half of 2012
3.
Status of Organizational Changes
4.
Continuing Remedial Actions (“Tactical Steps”)
5.
Refining Our Process |
| 2
©
2012 Weatherford. All rights reserved.
The Goal: Eliminate the Tax Material Weakness at Year-End
•
Update all tax account baseline evaluations and finalize remaining corrective
actions •
Ensure the appropriate tax processes are in place and are operating effectively
for 2012 •
Continue the cultural improvements related to roles, responsibilities, and
accountability over core controls and processes that impact tax accounting
and reporting Structure
the 2012 program with an eye toward establishing a sustainable
“best in
class”
tax function in future periods |
| 3
©
2012 Weatherford. All rights reserved.
The Goal: Foundational Project Principles
•
Tactical
•
Pragmatic
•
Action Oriented
•
Aligned Across the Business
•
Sustainable |
| Actions in the First Half of 2012
•
Continued commitment by the entire senior management team and the Audit Committee
to ensure the appropriate focus exists with respect to having appropriate
resources for the tax processes and to assure the quality of the tax
accounts •
We
have
worked
on
strengthening the tax organization by focusing on the people aspect of
what will
be
required
to
build
a
“best in
class”
tax
organization that will attract and retain the
tax resources required for the long-term sustainability of our tax
processes •
Continued execution and further enhancement of the tax processes
–
Enhanced quarterly work plan which addresses key balance sheet accounts to
include tax reserves (FIN 48), deferred tax liabilities (APB 23), and net
deferred tax positions (valuation allowance needs)
–
Return to accruals have been prepared for all returns filed through the end of
the second quarter
–
Company enhanced tax processes training for existing tax and controllers staff
on a global basis
•
Established structured project management office for the continued remediation
effort –
Currently headed by a third party advisor with significant process and controls
experience
with
the
charge
to
perform
an
“end
to
end
mapping”
of
our
tax
processes
4
©
2012 Weatherford. All rights reserved. |
| 5
©
2012 Weatherford. All rights reserved.
Status of Organizational Changes
•
Hired Vice President, Tax
–
Experienced with all aspects of our structure as well as strong background in
tax processes and controls
–
Experience
in
remediating a material weakness in income taxes at a prior company
•
Aligned non-US tax personnel with regional finance to ensure more local
accountability of tax processes
•
Created an organizational structure based on tax functional lines (planning,
accounting, compliance, and audits) to ensure sustainability of our tax
processes •
Hired Assistant Vice President, Tax Audits
–
Recognized
leader in the tax community with over 30 years of tax experience
•
Currently in active searches for other key positions in the tax department
5
©
2012 Weatherford. All rights reserved. |
| •
Tax Returns
–
Bring tax return filings and statutory records up to date
–
Complete all tax return to accrual analyses for fiscal year 2011
•
Complete tax basis balance sheets activities for entities for 2011
•
Complete review of internal transactions for tax impact and evaluate and document
2012 process
Continuing
Remedial
Actions
-
Baseline
Complete
all
tax
account sustainability baseline evaluations and corrective
actions by December 31, 2012
©
2012 Weatherford. All rights reserved.
6 |
| Continuing
Remediation
Actions
-
Process
•
Document the current state process flows
–
Identify and understand tax process and core finance process challenges that
will impact future tax processes
•
Challenge the current state process and refine as necessary to develop the target
state process
•
Develop the supporting templates for execution of the target state
•
Enable the processes with technology
•
Develop additional policies, procedures, and supporting manuals for the above and
modify controls as appropriate
•
Develop training, execute, and test on refined processes
7
©
2012 Weatherford. All rights reserved.
Ensure the appropriate tax processes are in place and are
operating effectively for 2012 |
| 8
©
2012 Weatherford. All rights reserved.
Continuing
Remedial
Actions
-
Culture
•
Communicate the reasons for required change
•
Clearly define and communicate roles and responsibilities
–
Preparer, reviewer, approver
–
Focus on both the Field (Finance and Tax) and Corporate Tax &
Controllers •
Train accountable individuals on work execution
•
Build the supporting organizational structure
•
Monitor and review results, identify areas of improvement, and adjust as
needed Continue to improve the processes related to roles,
responsibilities, and accountability over core controls and
processes that impact tax accounting and reporting to ensure
long-term sustainability |
 Refining Our Process: Embedding Control in How We Work
Weatherford Internal
Control Environment
Framework
COSO
identifies
five
components of internal control that need to be in
place and integrated to ensure the achievement of each of the objectives
in the following categories:
•
Effectiveness and efficiency of operations
•
Reliability of financial reporting
•
Compliance with applicable laws and regulations
Essential Components
Accountability
Roles &
Responsibilities
2
Tax
Control
Processes
1
Documentation
3
COSO –
Committee of Sponsoring Organizations
People
Processes and Procedures
Controls
Key
Tax Policies
Mgmt
Oversight
©
2012 Weatherford. All rights reserved.
9 |
 10
©
2012 Weatherford. All rights reserved.
Refining Our Process: Process Improvement is a Continuous Project
True sustainability is a multi-year process focuses on continuous
improvement Continuous Improvement
People
Tax, Controllers,
Operations, Legal, and
Treasury
Consistency
Standard Processes –
No Negotiations
Reliability
Align performance
metrics and rewards
Execution
Remediation of Material
Weakness and Low
Effective Tax Rate
Leadership and Commitment
Senior Management Team |
| 11
©
2012 Weatherford. All rights reserved.
11
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning, among other
things, Weatherford’s prospects for its operations, expectations
regarding future financial results and the resolution of our remediation of our
material weakness in internal controls over financial reporting of income
taxes, which are subject to certain risks, uncertainties and assumptions.
These include the Company’s inability to design or improve internal controls to address identified
issues; the impact upon operations of legal compliance matters or internal
controls review, improvement and remediation, including the detection of
wrongdoing, improper activities or circumvention of internal controls;
difficulties in controlling expenses, including costs of legal compliance matters
or internal controls review, improvement and remediation; impact of
changes in management or staff levels; the Company’s ability to manage
its workforce to control costs; the outcome of pending government investigations,
including the Securities and Exchange Commission’s investigation of
the circumstances surrounding the Company’s material weakness in its
internal control over financial reporting of income taxes; the outcome of ongoing
litigation, including shareholder litigation related to the Company’s
material weakness in its internal control over financial reporting of income
taxes and its restatement of historical financial statements; and other
operational and non-operational risks that are detailed in our most
recent Form 10-K and other filings with the U.S. Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results may vary materially from those
indicated in our forward-looking statements. We undertake no obligation
to correct or update any forward-looking statement, whether as a result of
new information, future events, or otherwise, except to the extent
required under federal securities laws. |