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Investors in the nation's publicly traded companies will soon have access to an unprecedented degree of corporate data when companies issue their annual reports, which, for the first time actually, will include factual statements about their central get a grip on over financial reporting and provide a larger degree of visibility.

To greatly help people understand the new reporting, Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers are suffering from two easy-to-use reference books.

It monitors the vital processes involved in recording transactions and preparing financial reports, each time a company measures its internal control over financial reporting. A business now must make public its analysis of the potency of its central control over financial reporting, including an explicit statement as to whether that control works well and whether management has recognized any "material weakness".

The business's independent auditor will consider management's assessment and express an impression on that assessment. These records would be to appear in corporate annual reports beginning in February 2005.

These new reports were set in place by the federal government in reaction to the group of business failures and corporate scandals that started with Enron in 2001. The reports are essential to buyers because effective internal control over financial reporting helps enhance the stability of financial reports and can be quite a deterrent to corporate fraud.

To make use of these records effectively, investors should consider that a weakness in internal get a grip on over financial reporting does not mean that a financial misstatement has happened or may occur, but that it could occur. It's a warning flag.

A material weakness must be examined in the context of the company's unique situation, including consideration of the following areas.

• Fraud: Does the weakness require corporate fraud by senior management?

• Duration: Was the weakness the consequence of a temporary breakdown or perhaps a more systemic problem?

• Pervasiveness: Does the weakness relate with things that may have a pervasive effect on financial reporting?

• Relevance: Is the weakness related to a process that's key to the business?

• Investigation: Could be the weakness associated with a current regulatory analysis or lawsuit?

• History: Does the organization have a history of restatements?

• Management reaction: How has management responded to the material weakness?

• Tone at the top: Does the weakness represent an issue with the "tone at the top?"

Content flaws can happen in virtually any part of the financial reporting process, and can vary with a company's features, the industry and the business enterprise environment. The newest disclosures do not address the soundness of a company's business methods or its capability to achieve financial goals. www.s-oxinternalcontrolinfo.com.- NU jt foxx