Audiovox 2004 Annual Report Download - page 111

Management's assessment of the effectiveness of the Company's internal control
over financial reporting as of November 30, 2004, has been audited by Grant
Thornton LLP, an independent registered public accounting firm, as stated in
their report below.
Planned Remediation Efforts to Address Material Weaknesses
The Company developed remediation plans and initiated action steps designed to
address each of the material weaknesses in the internal control over financial
reporting identified above and to implement any and all corrective actions that
are required to improve the design and operating effectiveness of internal
control over financial reporting, including the enhancement of the Company's
policies, systems and procedures. The Company implemented the following measures
to remediate the numbered control deficiencies identified above:
1. Remediated the information technology security controls in connection with
user access conflicts and segregation of duties related to certain
applications and business processes to ensure there is appropriate
authorization, execution, monitoring and review by independent individuals
by implementing a turnover software package to manage the information
technology change management system and a security software solution to
manage the Company's user access security and restrict access to data and
applications;
2. The Company divested the Wireless business before year−end and ACC is no
longer a significant part of the Company's continuing operating activities.
Accordingly, all deficiencies automatically remediate themselves as the
risks associated with the related control deficiencies no longer exist
subsequent to November 30, 2004;
3. Reviewed the financial controls and policies for the Company's sales
cut−off procedures and enhanced the controls and procedures in place by
creating a computer generated report that matches sales order date to proof
of delivery date for all sales orders that are at or near the financial
statement closing date. In addition, for all international sales orders
shipped direct to customers, the Company enhanced its procedures as it will
perform a two week sales cut−off review by comparing shipping documents to
the underlying billing documents;
4. Enhanced the design of the monthly control at corporate relating to the
reconciliation of the manual journal entries to the Company's ERP system by
segregating the duties of the individual processing the manual journal
entries with the individual performing the reconciliation and to ensure the
individual performing this review procedure at the operating division is
compliant with the evidential documentation requirements supporting their
review.
5. Enhanced the design of the controls relating to the Company's non−routine
customer sales order process by requiring the warehouse personnel to check
and verify that there is evidence of an authorized signature from the
financial department (from the authorized signature sheet) before the
non−routine sales order is shipped to the customer;
6. Increase the review and adherence to the Company's policies and procedures
in connection with the fiscal 2005 monitoring activities of Section 404 of
the Sarbanes−Oxley Act of 2002 and to ensure that process owners are
compliant with the evidential documentation requirements and the rules and
regulations of the Securities and Exchange Commission that require the
appropriate evidence of review and approval of significant transactions,
account analysis and related accounting entries by implementing a
documentation and review process. In addition, management will frequently
(during the fiscal 2005 second, third and fourth quarters) measure against
the results of its fiscal 2004 remediation plans by significant business
process to ensure compliance by the Company's process
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