estate sales, capitalization of direct and indirect costs of real
estate projects, equity accounting for variable interest entities,
accounting for guarantees and accounting for stock options.
-- Lack of policies and procedures to ensure proper accounting of
significant transactions. This deficiency impacted the Company's
accounting for real estate sales and equity accounting.
-- Lack of a sufficient level of experienced personnel to enable the
Company to close its books in a timely and accurate manner.
Additional control deficiencies may be identified by the Company's management or the Special Independent Committee as part of its ongoing review. At the present time, the Company's management expects to conclude that some of the identified control deficiencies were material weaknesses as of December 31, 2005. In addition, E&Y's audit reports are also expected to concur with management's preliminary conclusions regarding weaknesses in internal controls over financial reporting by the Company as of December 31, 2005. The Audit Committee and management have been evaluating appropriate remediation measures to address these control deficiencies and intend to develop and oversee a comprehensive remediation plan to address these control deficiencies.
The Company's management believes the accounting errors previously disclosed by the Company indicate a need to improve the quality and staffing of the Company's internal accounting resources. The following are among the changes implemented by the Company to date, which are in addition to any remedial measures that may be recommended by the Special Independent Committee and adopted by the Board following completion of the Special Independent Committee investigation:
-- New Chief Financial Officer. As previously disclosed, on September 6,
2007, Richard J. Nadeau was hired as the Co
|SOURCE Sunrise Senior Living, Inc.|
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