Item 9A. Controls and Procedures
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Item 9A. Controls and Procedures
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including
our principal executive officer and
principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this annual report as such
term is defined in Rules 13a-15(e) and
15d-15(e) promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).
Based on
this evaluation, our management, including our principal executive
officer and principal financial officer,
concluded that our disclosure controls and procedures were effective as of December 28, 2024,
to ensure that all
material information required to be disclosed by us in reports that we file
or submit under the Exchange Act is
accumulated and communicated to them as appropriate to allow timely
decisions regarding required disclosure and
that all such information is recorded, processed, summarized and reported
within the time periods specified in the
SEC’s rules and forms, and the rules of the Nasdaq stock exchange.
Changes in Internal Control over Financial Reporting
The combination of continued acquisition integrations and systems
implementation activity undertaken during the
quarter and carried over from prior quarters, when considered in
the aggregate, represents a material change in our
internal control over financial reporting.
As previously reported, the full integration of TriMed Inc. (“TriMed”)
will extend beyond year-end and, therefore, we excluded TriMed, which represents less than 0.5% of our total
net
sales, from our annual assessment of internal control over financial
reporting as of December 28, 2024,
as permitted
by related SEC staff interpretive guidance for newly acquired businesses.
During the quarter ended December 28, 2024,
post-acquisition integration related activities continued for our
dental
and medical businesses acquired during prior quarters.
These acquisitions, the majority of which utilize separate
information and financial accounting systems, have been included
in our consolidated financial statements since
their respective dates of acquisition.
Also, during the quarter ended December 28, 2024, we completed the systems
implementation activities for
implementing a new e-commerce system for our dental and medical
businesses in the UK.
Finally, we continued
systems implementation activities for our dental business in France and
Ireland.
All acquisitions, continued acquisition integrations and systems implementation
activities involve necessary and
appropriate change-management controls that are considered in our quarterly
assessment of the design and
operating effectiveness of our internal control over financial reporting.
The deficiencies in internal control over financial reporting identified
as of December 30, 2023 at the application
control level related to logical and user access management and segregation
of duties have continued to be the
subject of ongoing remediation, including implementation of specific
action plans and the testing/validation of
control operating effectiveness, which were substantially completed as of our year-end on December
28, 2024.
Management’s
Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f).
Our internal control system is designed to provide
reasonable assurance to our management and Board regarding the preparation
and fair presentation of published
financial statements.
Under the supervision and with the participation of our management,
including our principal
executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in Internal Control-Integrated
Framework (2013), updated
and reissued by the Committee of Sponsoring Organizations, or the COSO Framework.
Based on our evaluation
under the COSO Framework, our management concluded that our
internal control over financial reporting was
effective at a reasonable assurance level as of December 28, 2024.
The effectiveness of our internal control over financial reporting as of December 28,
2024, has been independently
audited by BDO USA, P.C., an independent registered public accounting firm and their attestation is included
herein.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance
that the objectives of the internal control system are met.
Because of the inherent limitations of any internal control
system, no evaluation of controls can provide absolute assurance that
all control issues, if any, within a company
have been detected.
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Henry Schein, Inc.
Melville, NY
Opinion on Internal Control over Financial Reporting
We
have audited Henry
Schein, Inc.’s
(the “Company’s”)
internal control over
financial reporting as
of December
28, 2024, based on
criteria established in Internal Control
– Integrated Framework (2013) issued
by the Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(the
“COSO
criteria”).
In
our
opinion,
the
Company
maintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
of
December
28,
2024,
based on the COSO criteria.
We
also
have
audited,
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December
30, 2023,
the related
consolidated statements
of income,
comprehensive income,
changes in
stockholders’ equity,
and cash
flows for
each of
the three
years in
the period
ended December
28, 2024,
and the
related notes
and our
report dated February 25, 2025 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s
management is
responsible for
maintaining effective
internal control
over financial
reporting and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying
“Item 9A, Management’s
Report on Internal
Control over Financial Reporting”. Our
responsibility is to express
an
opinion on the
Company’s internal
control over financial
reporting based on
our audit. We
are a public
accounting
firm
registered
with
the
PCAOB and
are
required
to
be
independent
with
respect
to
the
Company in
accordance
with
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.
Those standards require
that we plan
and perform the
audit to
obtain reasonable assurance
about whether effective
internal
control
over
financial
reporting
was
maintained
in
all
material
respects.
Our
audit
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audit also included performing
such other procedures as we
considered necessary in the
circumstances. We
believe
that our audit provides a reasonable basis for our opinion.
As indicated in
the accompanying “Item
9A, Management’s
Report on Internal
Control over Financial
Reporting”,
management’s assessment of and conclusion on the effectiveness of internal control
over financial reporting did not
include
the
internal
controls
of
TriMed
Inc.,
which was
acquired
on
April
1,
2024,
and
which is
included in
the
consolidated balance
sheets of
the Company
as of
December 28,
2024, and
the related
consolidated statements
of
income, comprehensive
income, changes
in stockholders’
equity,
and cash
flows for
the year
then ended.
TriMed
Inc. constituted less than 0.5% of total
net sales for the year ended
December 28, 2024. Management did not assess
the effectiveness of internal control
over financial reporting of TriMed
Inc. because of the timing of
the acquisition
which was
completed on April
1, 2024. Our
audit of
internal control over
financial reporting of
the Company also
did not include an evaluation of the internal control over financial reporting
of TriMed Inc.
Definition and Limitations of Internal Control over Financial Reporting
A
company’s
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding the
reliability of
financial reporting
and the
preparation of
financial statements
for external
purposes in
accordance
with
generally
accepted
accounting
principles.
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(1)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately and
fairly reflect
the transactions
and dispositions
of the
assets of
the company;
(2) provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with generally
accepted accounting
principles, and
that receipts
and expenditures
of the
company are
being made
only
in
accordance with
authorizations of
management and
directors of
the
company; and
(3) provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition
of
the
company’s assets that could have a material effect on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
of
effectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies or procedures may deteriorate.
/s/ BDO USA, P.C.
New York
,
NY
February 25, 2025
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