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A material weakness is a 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. Management has identified a material weakness in controls related to the Company’s disposition process related to AES Brasil.
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As of the date of the filing of this Annual Report on Form 10-K, our management believes we have made progress toward remediating the underlying causes of the material weakness. We believe these actions will remediate the forgoing material weakness. The material weakness will not be considered remediated, however, until the applicable controls operate and management has concluded, through testing, that the controls are operating effectively. Management expects to begin remediation efforts immediately and be completed by June 30, 2025.
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As more fully disclosed in Item 9A. - Controls and Procedures, we have identified a material weakness in our internal control over financial reporting that existed at December 31, 2024. The Company did not design effective controls over management's review of the disposition of AES Brasil, a complex non-routine transaction; specifically, the evaluation of the completeness and accuracy of data and information used in the impairment and disposition calculations of the AES Brasil disposal group. This control deficiency was not remediated as of December 31, 2024. Since there is a reasonable possibility that the control deficiency could result in a material misstatement in our financial statements that would not be detected, we determined that this control deficiency constituted a material weakness. While we are taking steps to implement a remediation plan, the material weakness will not be considered remediated until the applicable controls operate and management has concluded, through testing, that the controls are operating effectively. Furthermore, we can give no assurance that the measures we take will remediate the material weakness or that additional material weaknesses will not arise in the future, either of which could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, and in turn, could negatively impact investor confidence in our reported financial information.
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(ii) added a risk factor relating to its material weakness in its internal control over financial reporting in Item 1A of this Form 10-K; and
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In connection with the restatement described above, management has determined that the overstatement of impairment expense and related impact on the gain on disposition of the AES Brasil disposal group resulted in a material weakness in internal control over financial reporting as of December 31, 2024. For a discussion of management's considerations of the Company's disclosure controls and procedures, internal control over financial reporting, and material weakness identified, refer to Item 9A. - Controls and Procedures of this Form 10-K.
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Other than the material weakness discussed above, there were no changes that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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personnel. During the quarter ended December 31, 2025, we completed our testing of the operating effectiveness of internal controls impacted by these remediation efforts and determined the material weakness has been remediated as of December 31, 2025.
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Further, we have a significant equity method investment in Fluence. As a publicly listed company, Fluence is governed by its own Board of Directors, whose members have fiduciary duties to the Fluence shareholders. While we have certain rights to appoint representatives to the Fluence Board of Directors, the interests of the Fluence shareholders, as represented by the Fluence Board of Directors, may not align with our interests or the interests of our securityholders. As of December 31, 2024, Fluence continues to report that a material weakness in its internal control over revenue recognition has not yet been remediated. Such material weakness can impact the reliability of the Fluence financial information that we may include as part of our financial information.
Read in the filing ↗ Also in 10-K of Mar 2, 2026
systems are adequate to accurately and fairly reflect the transactions and dispositions of the assets of the Company, the identification of significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner could lead to undetected errors that could result in material misstatements in our financial statements.
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Notwithstanding the identified material weakness, our CEO and CFO have concluded that our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented and such financial statements are presented in conformity with GAAP.
Read in the filing ↗ Also in 10-Q of Nov 4, 2025
As of the date of the filing of this Quarterly Report on Form 10-Q, our management has taken significant measures towards remediation of this material weakness. While we have implemented the remediation measures described below, our conclusion on remediation will take place during our annual SOX testing which will conclude with the filing of our annual financial statements.
Read in the filing ↗ Also in 10-Q of Nov 4, 2025
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Read in the filing ↗ Also in 10-K of Mar 2, 2026
As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2024, management concluded that a material weakness in internal control over financial reporting existed. The Company did not design effective controls over the review of the disposition of AES Brasil, a complex non-routine transaction; specifically due to the use of incomplete data in the estimation of the fair value of the net assets of AES Brasil, which was used in calculation of the impairment expense after AES Brasil was classified as held-for-sale in Q2 2024. Throughout 2025, management implemented measures designed to remediate the control deficiency contributing to the material weakness, including: (i) policy updates detailing steps to perform in an impairment analysis of complex ownership structures, (ii) detailed instructions on considerations to be included in the fair value estimations, (iii) updates to held-for-sale and discontinued operations policies, and (iv) training to impacted
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Management continues to implement measures designed to ensure that the control deficiency contributing to the material weakness is remediated. The remediation actions include: (i) policy updates detailing steps to perform in an impairment analysis of complex ownership structures, (ii) detailed instructions on considerations to be included in the fair value estimations, (iii) updates to Held for Sale and Discontinued Operations policies, and (iv) training to impacted personnel.
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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 10, 2025 which expressed an unqualified opinion thereon.
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Due to the discovery of this error, the Company's management identified a material weakness in the Company's internal control over financial reporting that existed at December 31, 2024. The company did not design effective controls over management's review of the disposition of AES Brasil, a complex non-routine transaction; specifically, due to the use of incomplete data used in the impairment calculation of the AES Brasil disposal group.
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Notwithstanding the identified material weakness, as of the date of the filing of this Annual Report on Form 10-K, our management, including our CEO and CFO, believes that the audited consolidated financial statements contained in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented and such financial statements are presented in conformity with GAAP.
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Following a thorough review, Management determined that the revised controls have been designed effectively. However, the material weakness will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through the testing mentioned above, that the controls are operating effectively. Management will continue to monitor the operating effectiveness of these and other processes, procedures and controls and make any further changes management deems appropriate.
Read in the filing ↗ Also in 10-Q of Nov 4, 2025
We have audited The AES Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, The AES Corporation (the Company) has not maintained effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
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The Company carried out the evaluation required by Rules 13a-15(b) and 15d-15(b), under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon this evaluation, the CEO and CFO concluded that as of December 31, 2024, our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting described below.
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The Company, under the supervision and with the participation of its management, including the Company’s CEO and CFO, evaluated the effectiveness of its “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO concluded that, as of June 30, 2025, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting described below.
Read in the filing ↗ Also in 10-Q of Nov 4, 2025
… Specifically, EY’s report stated that the Company had not maintained effective internal control over financial reporting as of December 31, 2024 due to the effect of a material weakness identified by management in controls related to the disposition process of AES Brasil, as reported by the Company in “Part II, Item 9A. Controls and Procedures” of its Annual Report …
Read in the filing ↗ Also in 10-Q of Aug 4, 2026, 10-Q of Nov 3, 2026
Our internal controls, accounting policies, and practices are designed to enable us to evaluate transactions in a timely and accurate manner in compliance with GAAP, laws and regulations, taxation requirements, and federal securities laws and regulations in order to, among other things, disclose and report financial and other information in connection with our reporting requirements under federal securities, tax, and other laws and regulations. We have also implemented corporate governance, internal controls, and accounting policies and procedures in connection with the Sarbanes-Oxley Act of 2002. Our internal controls and policies have been and continue to be closely monitored by management and our Board of Directors. While we believe these controls, policies, practices, and systems are adequate to accurately and fairly reflect the transactions and dispositions of the assets of the Company, the identification of significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner could lead to undetected errors that could result in material misstatements in our financial statements.
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