Compliance Week: 119 Internal Control Disclosures in November, Up From 11 During the Same Period in 2003.

BOSTON -- In its Tuesday, Dec. 7 edition, Compliance Week will report that 119 public companies disclosed material weaknesses or significant deficiencies in internal controls during the month of November. That number is nearly the double the 63 reported in October, and over 10 times the number reported during the same month in 2003, when 11 companies disclosed weaknesses.

Compliance Week's November tally brings the total number of weakness and deficiency disclosures year-to-date to 526.

The increase was largely due to the volume of companies filing quarterly reports, which--for many companies--are their final 10-Qs before Sarbanes-Oxley Section 404 assessments are due as part of their next 10-K. The internal control provisions of SOX require management to assess the effectiveness of the company's internal control over financial reporting. Each company's auditor must also report on--and attest to--management's assessment.

Among Compliance Week's findings:

--49 percent of the November weakness and deficiency disclosures involved the company's financial systems and procedures. Typically, these problems are related to the financial close process, account reconciliation, or inventory processes.

--26 percent of the disclosures were related to personnel issues; typically cited were poor segregation of duties, inadequate staffing, and related training or supervision problems.

--Other common types of weaknesses, each accounting for 5 percent of disclosures, included revenue recognition, documentation, and IT systems and controls.

--In a relatively new trend, several companies warned of "potential" significant deficiencies, or potential problems with specific controls. In addition, many companies disclosed they had identified deficiencies, but the problems were not described specifically as "significant deficiencies."

--Mergers and acquisitions continue to be a source of weakness and deficiency disclosures, as well as international issues.

--Several companies disclosed that their outside auditor had warned them that there might not be enough time to meet the 404 deadline.

Details, examples, and the full disclosures are available in the Tuesday, Dec. 7 edition of Compliance Week, available at http://www.complianceweek.com.

Early editions are available to the media. To request a copy, send an email to [e-mail], or call Compliance Week at [phone].

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Compliance Week is a newsletter on corporate governance and compliance that reaches over 40,000 financial and legal executives at U.S. public companies. Compliance Week is an independent, unbiased publisher that does not provide any consulting, software or other services that could negatively impact its ability to serve its subscribers.