Johns-Manville Audit Committee Minutes on the Auditors' Qualified Report (1981)

Five pages of minutes of the Audit Committee of Johns-Manville's board, which met at Morgan Guaranty Trust Company in New York on March 5, 1981, with chairman John A. McKinney, the company's financial officers and representatives of its auditors, Coopers & Lybrand and Campbell Sharp, present. Robert A. Boardman, associate corporate counsel, and G. R. Johannes, senior director of accounting, "reviewed for the Committee the reasons for and the probable impact of the qualification of Coopers & Lybrand's report on J-M's 1979 and 1980 Consolidated position." The committee recommended that the board accept the financial statements as certified by Coopers & Lybrand for the 1980 annual report.

What it shows

Coopers & Lybrand's report of February 4, 1981 had withdrawn its clean opinion on J-M's 1979 balance sheet and qualified its opinion on 1979 and 1980, because the company's liability in the "substantial and increased number of asbestos/health legal actions" could not be reasonably estimated (the report is printed in the 1980 annual report). These minutes record that the qualification was explained to the committee, but not what was said about it. The rest of the meeting was routine: the auditors said their tests had found no significant weakness in the company's internal controls and that they had the full cooperation of its staff, the general auditor reported, and the committee approved the non-audit services Coopers & Lybrand could provide in 1981.

The board met the next day. Its minutes for March 6, 1981, written up with the other board minutes of 1980 to 1982, record McKinney reporting four straight defense verdicts that year and a plan to enlarge the Legal Department's trial staff.