What steps does Benihana plan to take to improve the design of its control activities?

According to Benihana's 2024 Franchise Disclosure Document, Benihana plans to improve its control activities by accelerating the timeline for testing and documenting the design and operating effectiveness of these activities. This is intended to aid in the repetition of control activities and the implementation of corrective actions as necessary.

These remediation efforts are in response to identified material weaknesses in the company's internal controls. These weaknesses primarily impacted business processes related to payroll, accounts payable, and property and equipment. The original redesign of certain controls in 2021 did not fully address all relevant design elements needed to manage the risks of material misstatement, as well as ensuring the completeness and accuracy of information used in those controls.

Additionally, Benihana found that certain controls were not executed as designed or lacked sufficient documented supporting evidence. In some instances, controls were redesigned and implemented without enough time to demonstrate their operating effectiveness. These weaknesses, while not resulting in material misstatements in financial statements, created the potential for significant accounting errors.

Furthermore, Benihana acknowledges a lack of formal and effective controls over user access to certain information systems. This deficiency could adversely affect the accuracy and completeness of data and financial reports generated by these systems, which are crucial for the company's business process controls. Addressing these issues is vital for maintaining the integrity of financial reporting and operational efficiency within Benihana.