I found an article very interesting today about disclosures released from LinkedIn as part of their planned IPO. Language used described material weaknesses in a seemingly similar way that other forward-looking statements are made - which I find disturbing.
How can an industry-darling like LinkedIn, with all the right investors, backers, and explosive growth suddenly "discover" that their internal controls are so deficient that their auditors may not be able to provide an opinion on them?
Material weaknesses are entirely under the control of Management and the company. To suggest that they are "beyond our control" and "may not be resolved" is tantamount to saying "You know our auditors might not approve of our behavior in the future - so don't say you weren't warned."
With roughly six years of experience under our belts, how can anyone continue to be surprised by the relatively straightforward operational and financial reporting requirements, and plethora of solutions available, to meeting Sarbanes-Oxley compliance? I wonder if this will become a trend; to lump internal control deficiencies in with world wars, global terror, inclement weather, and hostile governments as an escape clause for sound corporate governance...
What's your view?
The full story can be found here.