Shelley Susanne Shrader

Major: Accountancy Minor: Leadership Studies

University Honors with Honors in Accounting

Supervisor: Dr. Susan H. Ivancevich

AN ANALYSIS OF COMPANIES CITED FOR MATERIAL WEAKNESSES REGARDING LOANS AND RECEIVABLES IN 2006 AND 2007

Internal control, as defined by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, is the process designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations (COSO, 2008). This research project provides a comprehensive summarization of the material weaknesses reported by companies in 2006 and 2007 that failed to meet Section 404 internal control requirements in the area of loans and receivables. These weaknesses often reflect inadequate staffing, insufficient review, and weaknesses in controls. Remedies enacted by the companies to correct these failures are then discussed, as well as current trends in remediation. In light of the credit crisis that culminated in 2008, AIG and Fannie Mae are then analyzed with respect to the consequences material weaknesses in loans and receivables can have on specific companies and on the economy as a whole.