Support.com 2006 Annual Report Download - page 77

Report of Independent Registered Public Accounting Firm
on Internal Control over Financial Reporting
The Board of Directors and Stockholders of
SupportSoft, Inc.
We have audited management’s assessment, included in the accompanying Report of Management on Internal Control over
Financial Reporting, that SupportSoft, Inc. (the “Company”) did not maintain effective internal control over financial reporting as of
December 31, 2006, because of the effect of the Company’s lack of adequate controls in the accounting for international operations
with regard to review of amounts recorded for currency translation adjustments, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO
criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on
management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our
audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is 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. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
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.
A material weakness is a control deficiency, or combination of control 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. The following material
weakness has been identified and included in management’s assessment.
The Company’s internal controls did not appropriately quantify the currency translation gain or loss upon liquidation of a foreign
subsidiary in 2006, nor did the Company maintain appropriate controls related to the periodic reconciliation of inter−company
balances. Such objectives should have been met by the Company’s controls over accounting for international operations. In
connection with the fiscal 2006 year end audit, a misclassification of certain accumulated currency translation adjustments, which
balances should have been appropriately classified as an inter−company balance between the liquidated subsidiary
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Source: SUPPORTSOFT INC, 10−K, March 16, 2007