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SEPTA v. Orrstown Amended Complaint

SEPTA v. Orrstown Amended Complaint

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Published by Public Opinion
SOUTHEASTERN PENNSYLVANIA
TRANSPORTATION AUTHORITY,
v.
ORRSTOWN FINANCIAL
SERVICES, INC.

amended complaint filed 3/4/2013
SOUTHEASTERN PENNSYLVANIA
TRANSPORTATION AUTHORITY,
v.
ORRSTOWN FINANCIAL
SERVICES, INC.

amended complaint filed 3/4/2013

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Categories:Types, Business/Law
Published by: Public Opinion on Mar 06, 2013
Copyright:Attribution Non-commercial

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03/06/2013

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Report Form 10-K filing. In the 2011 10-K, Smith Elliott expressed the following

unqualified opinion:

[T]he financial statements referred to above present
fairly, in all material respects, the financial position of
Orrstown Financial Services, Inc. and its wholly-owned
subsidiary as of December 31, 2011 and 2010, and the
results of their operations and their cash flows for each of
the years in the three-year period ended December 31,
2011 in conformity with accounting principles generally
accepted in the United States of America.

Form 10-K 2011 Annual Report, filed 3/15/2011, at 77. But then, Smith Elliot

expressed the following adverse opinion as to the Company’s internal controls:

Case 1:12-cv-00993-YK Document 40 Filed 03/04/13 Page 168 of 190

164

A material weakness is a control deficiency, or
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 financial statements will not be
prevented or detected on a timely basis. The following
material weakness has been identified and included in
management’s assessment. The Company did not have a
timely and effective process to prepare and report
information related to loan ratings and the allowance of
loan losses allocations
. . . . In our opinion, because of
the effects of the material weakness described above on
the achievement of the objectives of the control criteria,
Orrstown Financial Services, Inc. and its wholly-owned
subsidiary has not maintained effective internal control
over financial reporting as of December 31, 2011
. . . .

Id. at 75-76 (emphasis added); see also id. at 77 (same).

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