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Regarding my blog last week on 404 disclosure examples, a member of our advisory board weighed in to note that the RCN Corp. disclosure technically was not an internal controls issue, but rather a “disclosure controls” issue. This member noted a concern that some companies have gotten so absorbed with 404/internal controls that they have forgotten about disclosure controls.

She noted that it was particularly interesting that RCN’s inability to obtain financial data was listed as a failure of their “disclosure controls”, but it actually doesn’t appear to be classified as a “material weakness” in internal controls. RCN did disclose two material weaknesses in internal controls (i.e. lease accounting and general ledger reconciliation), but they were not related to their inability to get timely financial data for equity investments.

This conclusion is interesting because there have been a lot of questions about how disclosure controls and internal controls differ – and whether a disclosure control failure suggests a per se deficiency in internal controls. It is possible that this was identified a “significant deficiency” in internal controls, which wouldn’t have required disclosure or resulted in an adverse 404 opinion.

Impact of the Arthur Andersen Decision

Many experts are saying the recent US Supreme Court decision regarding the Arthur Andersen indictment should be a real bellringer that echos far beyond the case itself. In this podcast, John Savarese, a Partner of Wachtell, Lipton, analyzes the importance of this decision, including:

– Why did the Supreme Court reverse the Andersen decision?

– What does this mean for document retention practices?

– How should companies fine tune their retention programs in light of this decision?

– Will auditors and other professional service providers continue to be “deep pockets” in the wake of the decision?

Disney CEO Succession Case Headed Towards Trial

Don’t forget tomorrow’s webcast, Wednesday, June 8th – “Managing D&O Departures and Arrivals” – with an added 15 minutes because there is so much ground to cover. This could be the most practical webcast of the year, dealing with a wide range of issues for you to consider each time a officer/director joins or departs the company.

And in light of the fact that the Delaware Chancery Court just allowed the lawsuit filed by Roy Disney over The Disney Company’s CEO succession process to proceed to trial – as noted in this article – it seems like a good time to learn about the nuances of CEO succession! That topic will be covered during the webcast by panelists that have been through many successions.