ADT 2007 Annual Report Download - page 177

over financial reporting were not effective as a result of a material weakness related to certain aspects
of accounting for income taxes as of September 28, 2007.
A material weakness is a deficiency, or combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We have determined that further improvements are required in our tax accounting processes before we
can consider the material weakness remediated. Management’s procedures and testing identified errors
that, although not material to the consolidated financial statements, led management to conclude that
control deficiencies exist related to tax effecting consolidating entries, analysis and reconciliation of
taxes receivable and taxes payable in non-U.S. jurisdictions, certain aspects of deferred taxes, and
procedures with respect to classification of tax amounts in the consolidated balance sheet. As a result
of these deficiencies, it is reasonably possible that internal controls over financial reporting may not
have prevented or detected errors from occurring that could have been material, either individually or
in the aggregate.
Our internal control over financial reporting as of September 28, 2007, has been audited by
Deloitte & Touche LLP, the independent registered public accounting firm that audited and reported
on the consolidated financial statements included in this Form 10-K, and their report is also included in
this Form 10-K.
November 27, 2007
Remediation Plan
Over the next year, we will continue to focus on our internal controls over accounting for income
taxes, and will take further steps to those mentioned earlier to strengthen controls, including the
following planned actions:
• Further enhancements to policies and procedures relating to tax account reconciliation and
analysis;
• Additional hiring of tax accounting resources;
• Training, guidance and communications to information providers regarding tax accounting
requirements;
• Comprehensive review of our tax accounting process and close procedures to identify areas that
require further improvements; and
• Enhanced monitoring of tax accounting submissions and tax account balances of our legal
entities globally.
Item 9B. Other Information
None.
2007 Financials 85