In our most recent 10-K, we disclosed that we had a material weakness in internal control over financial reporting related to the aggregation analysis for our segment reporting. If you recall, in our third quarter 2023 10-Q, we initiated segment reporting and disclosed three reportable segments: Data and Analytics (comprised of operating segments including Morningstar Data, Morningstar Direct, PitchBook, and Morningstar Sustainalytics), Asset and Index Solutions (Morningstar Wealth, Morningstar Retirement, and Morningstar Indexes), and Credit and Ratings Solutions (Morningstar DBRS). We aggregated our operating segments into those three reportable segments based on our review and application of a specific accounting standard that covers segment reporting (FASB ASC 280). During the third quarter of 2023, through our interpretation and application of the standard, we felt our aggregation analysis was appropriate and compliant. Upon review of our filing, the SEC evaluated our application of the standard and objected to our aggregation of certain operating segments.
We subsequently re-evaluated our application of FASB ASC 280 and, as you saw in our 10-K, we disaggregated several of our operating segments from our previous filing and disclosed five reportable segments: Morningstar Data and Analytics (includes Morningstar Data and Morningstar Direct), PitchBook (including the PitchBook Platform and Leveraged Commentary & Data), Morningstar Wealth (Investment Management, Office and Morningstar.com), Morningstar Credit (Morningstar DBRS) and Morningstar Retirement (includes Morningstar Managed Accounts). We also disclosed a “Corporate and All Other” category that includes Morningstar Sustainalytics, Morningstar Indexes, and unallocated corporate expenses.
Because we changed our application of FASB ASC 280 and our operating segment aggregation analysis for the fourth quarter of 2023, we determined that we had ineffective process-level controls over those changes, which resulted in the material weakness as of December 31, 2023. We are nonetheless confident in our internal control framework and the underlying financial information for the segments and the other areas of our reporting. The consolidated financial statements present fairly, in all material respects, the company’s financial position in our 2023 10-K. This control matter is isolated to segment reporting, and we expect it will be fully remediated in the first half of 2024 when we have had adequate time to test the effectiveness of the process and control improvements. Our first quarter 2024 10-Q will have the same segment presentation that was included in our 2023 10-K.