Autobytel

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d) The Company did not maintain effective controls over accrued liabilities and the related expense accounts.

Specifically the Company's controls over the completeness, valuation and existence of the determination of recurring accruals, including advertising, consulting, commissions, trade show expenses, health insurance claims and franchise taxes, as part of the close process were not effective.

This control deficiency resulted in the restatement of the Company's 2002 annual financial statements, 2003 annual financial statements, the second, third and fourth quarters of 2003 financial statements and the first and second quarters of 2004 financial statements and adjustments to the third quarter of 2004 financial statements.