If the company discovered the weakness – as seems to be the case – then I’d expect Deloitte to note that as a SOX issue but not on the basis of discovery.

I must confess I’ve not been able to find a 2006 SOX statement that *might* clarify matters.

From 5K miles distance I am wondering whether this is a case of a SOX sledgehammer to crack a nut. It’s a misclassification within an aggregated group – I don’t see it as a big deal although I can understand a hardcore interpretation. And let’s not forget this was reported 2 years on the trot for obvious reasons by the same auditor so I’m not convinced it’s a big enough deal. If it was, the CFO would surely have been ousted.

The problem is we will never know the full picture because Deloitte declined to be interviewed for the original CFO.com article. Read into that what you will.

A Material Weakness in Catapult’s internal controls is the worst possible issue this company could have with SOX. Unfortunately, auditors are giving Adverse Opinions on Internal Controls (the SOx opinion) and still giving unqualified opinions on the finaicial statments as a whole. (GE is a good example of this contradiction, a ready made shareholder suit if they ever stop making money or their stock tanks suddenly like the financial and mortgage companies.) The CFO of Catapult was not doing his job and, if you take Deloitte”s decision to call his lapse a Material Weakness, probably wouldn’t know GAAP if it bit him in the ass. I think Deloitte embarrassed him and he responded in a most petulant way. The fact that this company had this issue with Deloitte a year after dropping PwC, gives me the impression that although they are NASDAQ public, their management is probably not ready for prime time.

On a more serious note, the coming of IFRS and XBRL will demonstrate the divide that exists between EU ways of doing things and US. That will lead to interesting discussions which I would hope inform the players in these events. Of one thing I’m sure, it influences my readers and subscribers and that’s a good thing because it helps make me smarter.