BREAKING: Grant Thorton Declares Material Weakness In Mattersight's Internal Financial Controls

Mattersight just filed its restated SEC Form 10-K, for last year -- with the corrected and restated losses per share from continuing operations now included. In order they were $1.29, $1.28 and $1.26 in 2011, 2010 and 2009, respectively. So, Not. Getting. Better. Getting. Worse.

In addition, Grant Thorton has just declared that it cannot opine on whether Mattersight's changes will prevent re-occurences of these sorts of errors, thus:

. . .A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management identified a material weakness in internal control related to their process and procedures used in applying appropriate accounting to basic and diluted loss per share from continuing operations. This material weakness resulted in the restatement of the annual consolidated financial statements as of and for the years ended December 26, 2009, January 1, 2011, and December 31, 2011.

In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, Mattersight Corporation has not maintained effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control – Integrated Framework issued by COSO.

We do not express an opinion or any other form of assurance on management’s statement referring to the change in the internal control process and procedures of the material weakness. . . ."

Ouch. More soon. The original erroneous continuing operations losses per share were $0.74, $1.19 and $1.16 in 2011, 2010 and 2009. I'll put up a new post on the magintude of these errors, shortly -- but that is eye-popping: In 2011, the loss looked to be getting much smaller ($0.74) over time, but it is now $1.29. That is the fertile fodder for securities lawsuits, friends. Mark my words.

Now we wait for the Q1 2012 Form 10-Q -- it should be filed with the SEC by close of business tomorrow.