The January 27, 2005, issue of the Wall Street Journal contains an article by William M. Bulkeley and Robert Tomsho titled “Kodak to Get Auditors’ Adverse View.”

Instructions Read the article and answer the following questions.

(a) How does the article define a “material weakness” in internal financial controls? Does the existence of a material weakness mean that a misstatement of the company’s results has occurred?

(b) What other well-known companies received similar opinions from their auditors, and what percentage of U.S. companies are expected to report problems in their internal controls?

(c) What type of company is expected to be particularly affected by this problem?

INTERPRETING FINANCIAL STATEMENTS