At first glance, it was a seemingly incongruous filing that Centerpoint Energy made in January. The company confessed to ineffective disclosure controls and procedures surrounding some natural gas transactions, which overstated its 2004 revenues and expenses by $511 million—and then, two paragraphs later, asserted that its internal control over financial reporting was fine.
In fact, as a spate of corporate filings show, corporations actually can report strong controls for financial reporting and weak controls over disclosures, or vice-versa. The reason rests in the heart of the differences between Section 302 of Sarbanes-Oxley and Section 404.
