Eastman Kodak Co. on Wednesday disclosed that it has a "material weakness" in its internal controls over its financial reporting processes, and, as a result, its 2004 annual report will contain an adverse opinion by its auditor, PricewaterhouseCoopers. The Sarbanes-Oxley Act requires management and auditors to perform assessments of the effectiveness of such internal controls.

Errors in Kodak's treatment of income-tax accounting were discovered during the year-end closing process. Final earnings results for the fourth quarter, which had been scheduled for release this week, are being delayed about six weeks while the income-tax accounts are analyzed by management and external consultants.

The company said the weakness involved accounting errors, not misconduct. "Remember that Kodak has been devoting significant resources for more than a year to assessing, and strengthening as appropriate, its controls in the context of its Sarbanes-Oxley section 404 review," CFO Robert Brust said in a statement.

SunTrust Banks recently disclosed that the SEC has launched a formal investigation into its internal-control deficiency dealing with loan-loss reserves. The bank will be unable to attest in its 2004 annual report to the effectiveness of its internal controls over financial reporting processes.

Companies are harnessing IT to comply with Sarbanes-Oxley's section 404, which requires documentation and testing of internal financial controls. Vintage Petroleum Inc., an oil and gas distribution company, is using Livelink, an enterprise-content and business-process-management software product from Open Text Corp., to manage invoice processing at its U.S. accounting center, which handles about 10,000 invoices a month. The system replaces a manual process in which invoices were faxed between offices around the world. Carrie Caigle, network analyst and Livelink administrator at Vintage, says the system will help the company comply with Sarbanes-Oxley.