(d) Remediation Efforts to Address Material Weaknesses in Internal Control Over Financial Reporting
As discussed above, the Company’s Audit Committee initiated an independent investigation conducted with the assistance of
Skadden, Arps, Slate, Meagher & Flom LLP. The Company took steps, where practical, to implement in 2006 the remedial recommendations identified in the Audit Committee investigation and intends to complete the remaining remediation
recommendations and to remediate any remaining material weaknesses identified by December 31, 2007. The recommendations already implemented or currently being implemented include the following:
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Terminated the former PQIL VP Finance, and two mid-level subordinates; |
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Enhanced the internal audit function by appointing a more qualified person to that position to replace the former internal audit director;
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Required the head of internal audit to provide an annual internal audit plan to the audit committee and report to the audit committee on a quarterly basis;
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Initiated a comprehensive review of the policies and internal controls for manual journal entries; |
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Initiated the development of an ethics training program for financial staff; |
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Initiated a review of the Company’s certification process under Section 302 of Sarbanes Oxley; |
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Revised the certification to require confirmation that signers are not aware of any unsupported manual journal entries; |
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Initiated spreadsheet and end-user computer controls. |
In addition, the Company has taken the following remedial actions to improve the integrity of the financial reporting processes:
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Enhanced the internal audit function by appointing a more qualified person to that position to replace the former internal audit director;
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Reassigned personnel not qualified to lead accounting functions; |
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Consistently and periodically emphasized the importance of accurate financials and the need to address technical accounting matters through appropriate research and
through tone at the top discussions with finance staff; |
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Hired qualified outside resources to supplement accounting staff where necessary to assist in the development of technical accounting positions and improve
financial reporting processes. |
The Company has not been able to fully implement the remedial actions for the following
reasons:
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The Company sold two of its three business units in 2006 and announced plans to transition all of its corporate functions, including accounting and controls, from
its Ann Arbor headquarters to Dallas during 2007 – the transition of corporate
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