3. Identification of root causes of the write-downThe Committee's investigations have revealed that the primary root cause for breakdowns in the Company's control environment can be attributed to the failure to adequately supervise operations (including inventories), responsibly safeguard assets, and failure to maintain adequate controls over financial reporting relating to inventory. The UK operations did not properly implement well established Group internal controls for the rapidly expanding SRS business in the UK. Internal audit failed to perform end-to-end walk-throughs involving transactions associated with new plants and technologies in the UK. Additional control failures identified include, failure to test inventory adjustments, failure to identify and halt accumulations of excessive levels of inventories, and failure to successfully integrate IT systems in the UK. The Committee has also identified allegations of potential fraud in the UK, which are being further investigated.
Sims Metal Management Releases Special Committee Findings On UK Investigation; Goodwill Impairment
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