Spongetech Delivery Systems, Inc. (fka SPNGQ)

[Christy from Google]

A very misunderstood aspect of accounting and the related auditing impact. A company this size CAN NOT have effective traditional internal controls, which an outside auditor can rely on in addressing various auditing approaches and techniques. Most small compnies (with limited employees) have personnel wearing several hats. Therefore the auditors assume no internal controls and plan accordingly. There are usually three charactistics of effective internal controls; segregation of duties, restricted asscess and supervision. This is the case for SPNG and many other companies of this size. The SEC is not worried about this company limitation. I believe this was the issue between NAZ and 2002 SOX regulations. This should not be a problem in 2010. (A Fortune 500 company - YES, a very serious problem.)

The SEC is concerned about the "no Audit Committee" issue and the commingling of funds between RME and SPNG. The accounting staff is the same for both companies. And the intercompany transactions are a real issue, along with the various duties of all employees of the two entities.

A timeframe????? An audit committee, maybe 1 month; and a real CFO and an experienced accountant and several clerks, maybe three months. Hope this helps.