This excerpt taken from the GLBC 10-K filed Mar 16, 2005.
Evaluation of Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act. Those rules define internal control over financial reporting as a process 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 and includes those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of the prevention or detection of misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) and Item 308 of the SECs Regulation S-K, management is required to assess the effectiveness of the Companys internal control over financial reporting as of December 31, 2004. Since the Company qualifies for the relief granted in the exemptive order issued by the SEC on November 30, 2004, the Company has until May 2, 2005 to complete its SOX 404 assessment and file managements report on that assessment, as well as the audit report by the Companys independent registered public accounting firm containing their opinions on the effectiveness of the Companys internal control over financial reporting and managements assessment thereof. We expect to complete our
assessment of internal controls and to file an amendment to this Form 10-K on or prior to the May 2, 2005 SEC reporting deadline. We intend to include in such amendment our assessment of our internal controls and our independent registered public accounting firms related reports.
At the current stage of our assessment process, we have identified two material weaknesses in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant 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. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affects the companys ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the companys annual or interim financial statements that is more than inconsequential will not be prevented or detected. The material weaknesses are summarized as follows:
All of the above audit adjustments have been included in our audited financial statements for the year ended December 31, 2004. Certain of these adjustments impacted previously reported 2004 quarterly results. See Note 28 to the consolidated financial statements for restated quarterly financial information which highlights the net impact of the adjustments on the financial statements for each quarter.
Ernst & Young LLP, our independent registered public accounting firm, has not yet completed its audit of our internal control over financial reporting. Although its work is ongoing, Ernst & Young has indicated its agreement with the above assessment. Ernst & Young has also advised the Audit Committee of our Board of Directors that the internal control deficiencies do not affect Ernst & Youngs unqualified report on our consolidated financial statements as of December 31, 2004 and for the year then ended included in this annual report on Form 10-K.
We have implemented certain remediation measures and are in the process of creating and implementing additional remediation plans for the material weaknesses noted above. Such remediation activities include the following:
We expect to complete implementation of the measures necessary to remediate the material weaknesses by the end of the third quarter of 2005.
Since our assessment and Ernst & Youngs audit of internal controls are not yet complete, it is possible that significant deficiencies or material weaknesses in internal control over financial reporting may be identified in addition to those enumerated above.
No change in our internal control over financial reporting was made during the fourth quarter of 2004 that materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.