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Opening salvos at the SEC roundtable included talk of better definitions of material weaknesses.
Marie Leone, CFO.com | US
May 10, 2006
The lack of a solid definition of what constitutes a Material Weakness (MW) is but the tip of the iceberg. While there are deficiencies(D), that alone may (and I did say may) constitute a MW, there is also the relationship of a D to a significant deficiency (SD) and the aggregation of same that may raise a D to the level of a SD and a SD to a MW. Then there is the consideration of where the D, SD, or MW are found. Are they design or operational in nature, are they automated or manual, is it a SD that has been previously cited but never remediated? And what about compensating controls? All of these are questions that must be addressed and digested before a conclusion can be drawn as to the proper or should I say settled upon classification of the deficiency. There is definitely a need for guidance from above, because currently these definitions and ratings are not consistent within and between Firms in the industry, so how is the client supposed to know what to expect?
Posted by Robert Greene | May 10, 2006 03:47 pm
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