This excerpt taken from the CRUS 10-K filed Jun 4, 2007.
Remediation of the Material Weaknesses in Internal Control over Financial Reporting
Beginning November, 2002, the Company has implemented a number of improvements to its internal grant procedures. In particular, we implemented improvements to our granting processes for broad-based annual grants. For annual grants after 2002, the Company followed a practice to ensure:
Further, for monthly grants after 2002, the Company followed a monthly grant process for obtaining approval of proposed option grants (the Monthly Consent Process) to ensure:
In 2005, the Monthly Consent Process was further refined as follows:
In addition, during our initial internal review of stock option granting practices in 2006, we further improved and strengthened our Monthly Consent Process related to our stock option program through the addition of the following controls designed to provide appropriate safeguards and greater internal control over the stock option granting and administrative function:
As of the date of this filing, these controls continue to be in effect.
Neither management, nor the Special Committee has identified any grant dates selected with hindsight or prior to completing the formal approval process since 2003. The adjustments to our financial statements principally resulted from revisions made to measurement dates for certain options granted prior to December 31, 2002. The Company is currently reviewing the Special Committee recommendations to ensure that we continue to strengthen our controls over our stock option granting process.
This material weakness was initially identified in conjunction with the Special Committees investigation and was remediated based upon previously implemented process improvements and the subsequent resignation of our former chief executive officer on March 5, 2007.