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As noted above, we continue to identify, develop and begin to implement remedial measures, including the development of a detailed plan and
timetable for the implementation of the recommendations of the Independent Review. As part of the Revenue Independent Review, the Audit
Committee will also consider any appropriate additional remedial measures, including those involving internal controls and processes.
The above mentioned changes in internal control over financial reporting materially affected our internal control over financial reporting, and
these changes and expected changes as a result of remedial measures to be developed and implemented are reasonably likely to materially
affect our internal control over financial reporting in the future. We intend to continue to make ongoing assessments of our internal controls
and procedures periodically and as a result of the recommendations of the Independent Review and any additional recommendations of the
Revenue Independent Review.
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reviews, and
• establish minimum documentation requirements with respect to balance sheet entries.
• As part of the initial development of this plan, in the first quarter of 2004, we increased our focus on the review of specific
balance sheet accounts.
• Review of Finance Department Organizational Structure
. We announced, and began to implement, plans to transform our finance
organization, which include a renewed commitment to transparency as a fundamental goal. Measures we have begun to implement
include:
• In the first quarter of 2004, we began to enhance our global technical accounting group and establish global contract review
and global finance governance teams.
• We engaged Accenture, a global management consulting and technology services firm, in the third quarter of 2004 to assess
the finance organization’s structure, processes and systems, with an expected assessment completion date of March 2005.
• We established a global corporate finance Sarbanes-Oxley compliance group beginning in the third quarter of 2004.
• We have hired additional full-time finance personnel (with a focus on qualified accounting professionals) as part of an
initiative introduced by the CFO and controller in March 2004.
• Training Initiatives
.
• We re-established our formal training group (led by the global finance governance team described above) to implement
ongoing training programs for finance personnel globally. The group’s focus includes training with respect to SFAS No. 5;
accounting for hedging and derivatives; revenue recognition, accruals and provisions; and SFAS No. 52.
• Internal Audi
t
.
• In the first quarter of 2004, we modified the mandate of our Internal Audit function to place a greater emphasis on the
adequacy of, and compliance with, procedures relating to internal control over financial reporting.
• In October 2004, we engaged outside consultants to conduct a strategic performance review of the internal audit function. The
objective of this review is to ensure that internal audit continues to meet professional internal audit standards and moves
towards audit best practices.
• Manual Journal Entry Processes
.
• In the fourth quarter of 2003, we began to modify our manual journal entry processes by implementing new procedures, with
a focus on approvals of manual journal entries, more stringent documentation processes and reduction of user access to
manual journal entry functions.