Evaluation of Internal Control

Evaluation of Internal Control

In accounting, the study of the procedures that a company uses to check its own work for accuracy. In an audit in the United States, an auditor is required to evaluate internal controls to ensure that they are sufficient and to report on real or potential problems with them. See also: Internal audit.
References in periodicals archive ?
Identifying and assessing general control considerations at the activity/process level -- This section covers the importance of general IT controls to an evaluation of internal control over financial reporting, and provides guidance on what Section 404 compliance teams should look for when evaluating these controls.
In connection with its evaluation of internal control over financial reporting as of November 30, 2004, Company management has identified certain deficiencies in the Company's internal control over financial reporting.
The time and resources committed to the restatement of prior periods financial statements done in 2004 delayed our internal timetable with respect to our documentation, assessment and evaluation of internal control over financial reporting, which were undertaken in order to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404").
Management is working expeditiously to finalize its evaluation of internal control over financial reporting in order to file the Form 10-Q for the second quarter.
Further, upon completion of its ongoing evaluation of internal control over financial reporting the Company may identify additional control deficiencies, and those deficiencies, alone or in combination with others, may be considered additional material weaknesses.
Although none of these deficiencies have been identified as a significant deficiency or material weakness at this time, the evaluation of internal control over financial reporting is not yet complete and there can be no assurance that, as a result of the ongoing evaluation, additional deficiencies will not be identified or that any deficiencies identified, either alone or in combination with others, will not be considered a significant deficiency or a material weakness.
In connection with its evaluation of internal control over financial reporting, Company management has concluded that, as of December 31, 2004, the Company had ineffective controls over the application and monitoring of cash payments received from customers and the issuance of customer credit memos and discounts.
The Nasdaq Stock Market's action follows CPC's completion of its evaluation of internal control over financial reporting and the company's amendment to its 2005 Form 10-K filed with the SEC on June 5, 2006.
Although the Company and the Audit Committee have not completed the evaluation of internal control over financial reporting for fiscal 2005, it is likely that the Company and its independent registered public accounting firm will conclude that the Company's internal controls continue to be ineffective as of January 29, 2006.
The NASDAQ Stock Market has ruled the Company's common shares ineligible for quotation on the OTC Bulletin Board because the Company's Annual Report on Form 10-K/A filed with the SEC on May 4, 2006 does not include disclosure of management's evaluation of internal control over financial reporting as required by Section 404 of Sarbanes-Oxley Act of 2002.
In addition, management has not yet completed its evaluation of internal control over financial reporting as of December 31, 2005.
As management continues its evaluation of internal control over financial reporting, and its assessment of the effect of the restatements on its previously issued financial statements, additional control deficiencies may be identified and those control deficiencies may also represent one or more material weaknesses.
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