FRP » Topics » Changes in Internal Controls over Financial Reporting

This excerpt taken from the FRP 10-Q filed Nov 7, 2008.

Changes in Internal Controls over Financial Reporting

        We continue to update our internal controls over financial reporting as necessary to accommodate any modifications to our business processes or accounting procedures. During the quarter ended September 30, 2008, there have been no changes that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except as indicated below.

        On March 31, 2008, we completed the acquisition of Spinco, which was accounted for as a "reverse acquisition" with Spinco being the acquirer for accounting purposes. As a result of the transaction, certain process level controls covered by this report have been developed and executed by Verizon. Some of these controls will continue to be executed by Verizon in accordance with the transition services agreement. Our management has extended our overall financial reporting controls to evaluate the output from these processes, as well as existing FairPoint processes.

        In addition, in conjunction with the merger, we are in the process of developing systems and processes to support the Northern New England business. While many of these processes will not be implemented until the conclusion of the transition services agreement, certain accounting and payroll-related processes have been implemented.

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PART II—OTHER INFORMATION

Item 1.    Legal Proceedings.

        From time to time, we are involved in other litigation and regulatory proceedings arising out of our operations. Management believes that we are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on our financial position or results of operations.

Item 1A.    Risk Factors.

        The following risk factor is added to the risk factors previously disclosed in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2007, under the heading "Risks Related to Our Business."

This excerpt taken from the FRP 10-Q filed Aug 8, 2008.

Changes in Internal Controls over Financial Reporting

        We continue to update our internal controls over financial reporting as necessary to accommodate any modifications to our business processes or accounting procedures. During the quarter ended June 30, 2008, there have been no changes that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except as indicated below.

        On March 31, 2008, we completed the acquisition of Spinco, which was accounted for as a "reverse acquisition" with Spinco being the acquirer for accounting purposes. As a result of the transaction, certain process level controls covered by this report have been developed and executed by Verizon. Some of these controls will continue to be executed by Verizon in accordance with the transition services agreement. Our management has extended our overall financial reporting controls to evaluate the output from these processes, as well as existing FairPoint processes.

        In addition, in conjunction with the merger, we are in the process of developing systems and processes to support the Northern New England business. While many of these processes will not be implemented until the conclusion of the transition services agreement, certain accounting and payroll-related processes have been implemented.

52



PART II—OTHER INFORMATION

Item 1.    Legal Proceedings.

        From time to time, we are involved in other litigation and regulatory proceedings arising out of our operations. Management believes that we are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on our financial position or results of operations.

Item 1A.    Risk Factors

        The risk factors presented below amend and restate the corresponding risk factors previously disclosed in "Item 1A. Risk Factors" of our Quarterly Report on Form 10-Q for the period ended March 31, 2008. There have been no other material changes to the risk factors disclosed in "Item 1A. Risk Factors" of our Quarterly Report on Form 10-Q for the period ended March 31, 2008.

        For a more comprehensive discussion of the risks facing us, refer to Exhibit 99.1 to this Quarterly Report.

This excerpt taken from the FRP 10-Q filed May 16, 2008.

Changes in Internal Controls over Financial Reporting

        We continue to update our internal controls over financial reporting as necessary to accommodate any modifications to our business processes or accounting procedures. During the quarter ended March 31, 2008, there have been no changes that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except as indicated below.

        On March 31, 2008, we completed the acquisition of Spinco, which was accounted for as a "reverse acquisition" with Spinco being the acquirer for accounting purposes. As a result of the transaction, certain process-level controls covered by this report have been developed and executed by Verizon. Some of these controls will continue to be executed by Verizon in accordance with the transition services agreement. Our management has extended our overall financial reporting controls to evaluate the output from these processes, as well as existing FairPoint processes.

        In our Annual Report on Form 10-K for the year ended December 31, 2007, we disclosed that our management determined that our internal controls over financial reporting were not effective as of December 31, 2007, because our management oversight and review procedures designed to monitor the effectiveness of control activities in the northern New England division of Legacy FairPoint, which was formed in 2007 to handle transactions relating to the merger, were ineffective. As a result, errors existed in capitalized software costs, operating expenses, accounts receivable, prepaid expenses, accounts payable and accrued expenses in our preliminary 2007 consolidated financial statements. These identified errors were corrected prior to the finalization of those financial statements. During the quarter ended March 31, 2008, we have implemented additional management review procedures, similar to those already performed for all other divisions, to address the above-referenced material weakness. These procedures include detailed review of the general ledger for the northern New England division, additional reviews of more complex accounting entries, and detailed review of accounts payable transactions to ensure timely recording of expenses. Based on our evaluation as of March 31, 2008, we believe these additional procedures have effectively corrected the material weakness that was identified as of December 31, 2007, and that no material weakness exists as of March 31, 2008.

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PART II—OTHER INFORMATION

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Virgin Mobile USA (VM)
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