|
Quotes & Info
|
| CGSY.OB > SEC Filings for CGSY.OB > Form 8-K/A on 31-Dec-2008 | All Recent SEC Filings |
31-Dec-2008
Changes in Registrant's Certifying Accountant
As previously reported, the chairman of the audit committee of the Company received a notice dated October 8, 2008 from Plante & Moran PLLC ("Plante"), the Company's independent registered public accounting firm at the time, indicating that Plante did not intend to stand for re-election with respect to the audit of the December 31, 2008 consolidated financial statements and, effective upon the earlier of November 15, 2008 or the filing of the Company's Form 10-Q for the quarter ended September 30, 2008, Plante's relationship with the Company would end. The report issued by Plante in connection with the audit of the Company for the years ended December 31, 2007 and December 31, 2006 expressed an unqualified opinion and included an explanatory statement wherein Plante expressed substantial doubt about the Company's ability to continue as a going concern.
As a matter of clarification, Plante did not express an adverse opinion or a disclaimer of opinion nor was its report modified as to uncertainty, audit scope, or accounting principles.
As previously reported, with respect to the years ended December 31, 2007 and 2006 and through June 30, 2008, there were no disagreements with Plante on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Plante's satisfaction, would have caused them to make reference thereto in connection with the audited or interim financial statements for the periods ended December 31, 2007 and June 30, 2008, respectively.
As a matter of clarification, the representations in the previous paragraph extend through August 14, 2008 (the date Plante completed its audit-related work with respect to the Company's 2007 Annual Report), October 8, 2008 (the date of Plante's notice), and November 14, 2008 (the date of the filing of the Company's Quarterly Report for September 30, 2008 and Plante's review thereof). Effective November 14, 2008, Plante's relationship with the Company ended.
During the year ended December 31, 2007, there were no "reportable events" (as such term is defined in Item 304(a)(1)(v) of Regulation S-K) except for the following material weaknesses.
As previously reported, and as stated in the Company's Form 10-KSB/A for the
year ended December 31, 2007, management conducted an assessment of internal
control over financial reporting as of December 31, 2007, as required under
Section 404 of the Sarbanes-Oxley Act of 2002. The assessment was conducted
using the criteria in Internal Control over Financial Reporting - Guidance for
Smaller Public Companies issued by the Committee of Sponsoring Organizations of
the Treadway Commission. As a result of this assessment, the Company's
management identified three material weaknesses with respect to the internal
controls over financial reporting: (i) the Company did not maintain a majority
of independent directors and its Board of Directors did not have a designated
financial expert; (ii) staff and systems had not yet been deployed in a manner
that allows for the desired level of segregation of duties to operate and be
documented in a manner sufficient to meet Sarbanes-Oxley standards that will
need to be evidenced in the near term; and (iii) the contingent terms of
previous financing transactions had not been adequately analyzed in light of the
volume of increasingly complex accounting and reporting standards issued by
various promulgating bodies. As reported in the Company's Form 10-KSB for the
year ended December 31, 2006, management conducted an evaluation of the
effectiveness and the design and operation of disclosure controls and procedures
as of December 31, 2006, as required by Rule 13a-15(b) under the Exchange
Act.. Based on the evaluation, the Company concluded that the following material
weakness existed. During the third and fourth quarters of 2006, the Company
completed the acquisitions of 20/20 Technologies, CentrePath, and Global
Capacity Group. Since these entities have limited resources for processing
accounting information and financial reporting, management concluded that a
material weakness existed related to proper segregation of duties at these
locations.
As a matter of clarification, and as stated in the Company's Form 10-KSB/A for the year ended December 31, 2007, the evaluation discussed above was conducted under the supervision and with the participation of the Company's management, including its chief executive officer and chief financial officer. In addition, in each case where material weaknesses were identified, the audit committee discussed the subject matter of these events with Plante. The Company has authorized Plante to respond fully to the inquiries of the Company's successor independent registered public accountant with respect to these events.
The Company provided Plante a copy of this Report on Form 8-K/A and requested Plante to furnish it with a letter addressed to the SEC stating whether Plante agrees with the above statements made by the Company. A copy of Plante's letter stating its agreement, dated December 30, 2008, is filed as Exhibit 16.1 to this Form 8-K/A.
As a matter of clarification, the Company will file a Form 8-K regarding engagement of its new independent registered public accounting firm upon completion of the current selection and acceptance process, which includes approval by the Company's Board of Directors.
Item 9.01 Exhibits.
16.1 Letter from Plante & Moran, PLLC.
|
|