CORE » Topics » Managements Report on Internal Control over Financial Reporting

This excerpt taken from the CORE 10-K filed Mar 13, 2009.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management did not assess the internal control over financial reporting at our New England division, which we acquired on June 23, 2008 and which represented approximately 6% and 5% of our net and total assets, respectively, 3% of revenues and less than 5% of income before income taxes of the consolidated financial statements amounts on a FIFO basis as of and for the year ended December 31, 2008.

Based on this assessment, we concluded that our internal control over financial reporting was effective as of December 31, 2008.

Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report which appears herein.

This excerpt taken from the CORE 10-Q filed May 12, 2008.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. We assessed the effectiveness of our internal control over financial reporting as of March 31, 2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, we concluded that our internal control over financial reporting was effective as of March 31, 2008.

This excerpt taken from the CORE 10-K filed Mar 14, 2008.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, we concluded that our internal control over financial reporting was effective as of December 31, 2007.

Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report which appears herein.

This excerpt taken from the CORE 10-K filed Mar 16, 2007.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become in adequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

With the participation of the Company’s chief executive officer and chief financial officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2006, based on the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006 has been audited by Deloitte and Touche LLP, the Company’s independent registered public accounting firm, as stated in their report which appears herein.

Management excluded from its assessment internal control over financial reporting at our Pennsylvania division, which we acquired on June 19, 2006 and which represented approximately 14% and 11% of our consolidated net and total assets, respectively, 6% of the consolidated revenues and less than 1% of the consolidated net income before income taxes of the consolidated financial statements as of and for the year ended December 31, 2006. Accordingly, management’s assessment did not include the internal control over financial reporting at the Pennsylvania division.

Remediation of Material Weaknesses Identified as of December 31, 2005

A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As disclosed in Item 9A of our 2005 annual report on Form 10-K, management had identified 11 material weaknesses in our internal control over financial reporting as of December 31, 2005. Two of the material weaknesses were related to the control environment, commitment and lack of sufficient technical resources to manage, review, and ensure certain accounts and balances were adequately accounted for and

 

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disclosed properly. These two material weaknesses contributed to the remaining nine material weaknesses that specifically related to certain transactions. During 2006 the control environment was assessed and actions were taken, in conjunction with the implementation, testing and review of an internal control framework in compliance with Section 404 of the Sarbanes-Oxley Act of 2002, which we refer to as SOX 404. Specifically management undertook the following steps to remediate these material weaknesses:

 

   

Reviewed our entity level controls, and held meetings to discuss the importance of financial controls and procedures and communicated expectations throughout the organization.

 

   

Heightened awareness of the importance of an adequate control environment, starting with executive management and filtering throughout the organization.

 

   

Increased the membership of the Disclosure Committee.

 

   

Developed and communicated a disclosure communication protocol, including attestation procedures for field controllers.

 

   

Implemented additional procedures to identify and properly account for complex routine and non-recurring transactions.

 

   

Evaluated and enhanced the corporate finance organizational structure.

 

   

Formalized technical training requirements for corporate accounting professional staff.

 

   

Engaged an external advisory firm to provide technical support as well as assist in the evaluation of our remediation plan.

 

   

Implemented the use of checklists and adopted process improvements for the Company’s financial statement close process.

 

   

Enhanced supervisory procedures that included additional levels of analysis and review for complex accounts.

 

   

Implemented SOX 404 and tested the internal control framework.

Material Weakness Identified as of December 31, 2006

Management has completed their review and testing of the new procedures and controls that were put in place and has concluded that the following material weakness in our internal control over financial reporting remained as of December 31, 2006:

 

   

The Company did not maintain effective controls over the financial reporting process due to an insufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with its financial reporting requirements and the complexity of the Company’s operations and transactions.

Status of Material Weakness Remediation

The Company believes it has made substantial progress in the remediation of the material weakness described above, through the design and implementation of an enhanced financial organizational structure and other steps described above. However, a number of the permanent technical staff and organizational changes were made in the later half of 2006 and have not had sufficient time to be fully integrated into the operations of our internal control over financial reporting. As such, the identified material weakness in our internal control over financial reporting will not be considered remediated until the organizational changes are in operation for a sufficient period of time for our management to conclude that the control environment is operating effectively.

Based on this evaluation, our management has concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2006.

 

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