Airtran 2005 Annual Report Download - page 47

Disclosure Controls and Procedures. We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to process,
summarize and disclose this information within the time periods specified in the rules of the SEC. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated
our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 as amended (the “Exchange Act”).
Based on this evaluation our Chief Executive Officer and Chief Financial Officer have concluded that, as a result of the material weakness in our internal control over financial reporting discussed below, our disclo-
sure controls and procedures were not effective as of the end of the period covered by this annual report.
Management’s Annual Report on 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)
under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control— Integrated Framework. Based on that assessment, we have concluded that our internal control over financial reporting was not effective as
of December 31, 2005 due to a material weakness.
A material weakness is a control deficiency, or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not
be prevented or detected. As of December 31,2005, the Company has determined that a material weakness exists relating to inadequate staffing and a lack of financial accounting expertise. This deficiency resulted
in certain adjustments to revenue, advertising expense, depreciation and deferred compensation. Although none of these adjustments were material, until this deficiency is remediated, there is more than a remote
likelihood that a material misstatement to the annual or interim Consolidated Financial Statements could occur and not be prevented or detected by the Company’s controls in a timely manner. Because of this mate-
rial weakness, we have concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2005 based on the criteria in the Internal Control—Integrated Framework.
Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2005, has been audited by Ernst & Young, LLP, independent registered public accounting firm who also
audited our consolidated financial statements. Ernst & Young’s attestation report on management’s assessment of our internal control over financial reporting appears below.
:: REMEDIATION OF MATERIAL WEAKNESS IN INTERNAL CONTROL : :
The lack of staff resources and financial expertise arose due to employee turnover and the inability of the Company to timely fill accounting and other financial related positions. Our management, with the
oversight of the Company’s Audit Committee, has devoted considerable effort to remediating the material weakness identified. However, as of December 31, 2005, the Company had not fully remediated the
material weakness in the Company’s internal control over financial reporting. The Company’s remediation plan is as follows:
•The Company has staffed a number of key accounting and financial management positions and is diligently seeking to fill open supporting staff positions.
•The Company will add additional accounting management positions.
•The Company will provide education regarding effective review procedures to the appropriate accounting and financial personnel.
In addition, the Company will continue to monitor the effectiveness of these remedial actions and make any further changes as management determines to be appropriate.
Other than the changes identified above, there have been no changes to our internal control over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
:: ::
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CONTROLS AND PROCEDURES