Nautilus 2007 Annual Report Download - page 65

Table of Contents
Remediation Efforts on the Internal Controls Surrounding Management
’s Review of Significant Non-Routine Transactions and Review of
Significant Estimates and Reserves.
The following remedial actions have or will be undertaken to address the material weakness in the controls around the review of significant non-
routine transactions and the review of significant management estimates and reserves:
Our management, including our Chief Executive Officer and our Chief Financial Officer, do 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 control effectiveness to future periods are subject to risk. The Company’s internal control over financial
reporting as of December 31, 2007 has been audited by Deloitte & Touche LLP an independent registered public accounting firm, as stated in
their report that is included below.
Changes In Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2007.
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Key positions of the accounting department are in the process of being filled, including the Corporate Controller.
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Additional training will be provided to accounting personnel for specific technical areas of high risk.
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Key accounting and finance personnel will be assigned to perform monthly review of all significant non
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routine transactions and
significant management estimates and reserves.