Nautilus 2006 Annual Report Download - page 60

Table of Contents
We have implemented and will continue to implement changes to our processes to improve our internal control over financial reporting.
The following steps have been taken to remediate the conditions leading to the above stated material weaknesses:
Remediation Efforts on the Internal Controls Surrounding the ERP Implementation
Remediation Efforts on the Internal Controls Surrounding Analyzing and Recording Contingencies
Finally, as part of our monitoring effort of the Company’s internal control environment, we have reported on the progress and status of
the above remediation actions to the Audit Committee of the Board of Directors.
Based on our testing of these enhanced procedures and increased staffing levels, management determined that, as of December 31, 2006,
we have remediated the material weaknesses in internal control over financial reporting as disclosed in the Annual Report on Form 10-K for
December 31, 2005.
Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and
procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives
will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that
breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.
Changes In Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2006.
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System users received additional training on the effective and efficient use of the system to ensure data accuracy.
• Additional level of review has been implemented requiring all significant accounting estimates be reviewed by the Corporate
Controller and the Chief Financial Officer on a monthly basis, and
• The Company increased staffing levels in fiscal 2006 and reorganized the finance and accounting functions placing emphasis on
financial reporting and accounting.