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SEC Accountant: Do Not Disguise 404 Weaknesses

Compliance Week | December 14, 2004

At a national accounting conference last week, Securities and Exchange Commission Deputy Chief Accountant Andrew D. Bailey Jr. reminded companies that they must provide detailed descriptions of material weaknesses, and should not make any attempt to veil or hide them.

"I want to remind registrants that they need to provide complete, robust, and transparent disclosures," said Bailey, who warned companies not to try to disguise or “pretty up” material weaknesses. "[P]rovide a full explanation of the weakness in question and any remedial action that have occurred or will occur so that investors can determine for themselves the severity of the weakness."

Speaking at an AICPA conference on developments at the SEC and the Public Company Accounting Oversight Board, Bailey also urged companies to contact the Commission with specific questions regarding the internal control...

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