November 10, 2005
Disclosure Controls: Interplay with Internal Controls and Remediation “Cooling Off” Periods
In response to member inquiries, I recently polled my advisory board on several issues involving disclosure controls and how independent auditors were reacting to deficiencies – and have now posted some analysis of these issues in the “Disclosure Controls” Practice Area.
For example, when considering the interplay of internal controls and disclosure controls, here is one situation that should serve as a “cautionary note.” Mittal Steel (formerly known as International Steel Group) disclosed a material weakness in internal controls in Section 9A of its last Form 10-K – but yet the company concluded that its disclosure controls were effective. Notably, in its attestation, the company’s independent auditor stated that it disagreed with the company’s conclusions regarding the effectiveness of its disclosure controls. Ouch!
Let me know if you have any other 404 issues or anecdotes to share this proxy season.
“The Protection Against Executive Compensation Abuse Act”
I’m gonna try to make it down for the press conference today where the Democratic leaders of the House will introduce “The Protection Against Executive Compensation Abuse Act.” As this press release indicates, the proposed Congressional legislation appears to mainly focus on eliciting more disclosure about executive compensation practices in an effort to address the “problem of runaway executive compensation.”
This development could spur the SEC to even quicker action on the compensation rulemaking project that is expected to be proposed sometime during the next few months. And it makes the upcoming CompensationStandards.com webcast series on proxy and 8-K disclosures even more critical: “Your Upcoming Proxy Disclosures—What You Need to Do Now!” and “Real Life Examples (and Explanations) to Meet the SEC’s New Expectations.”
To listen to this webcast series, renew your CompensationStandards.com membership today – or if you are not a member, try a no-risk trial (and also get access to the recently completed “2nd Annual Executive Compensation Conference” at reduced rates).