Bisys officials said Tuesday that they will not meet a deadline for the company's annual 10-k filing with the SEC. The reason for the missed deadline was an issue with the documentation process in Bisys' preparation for a SAS 70 review, according to a statement. The 10-k was due today (September 13).

Bisys officials stated that as they were preparing to file the 10-k, a "current employee" of its Fund Services business raised "certain issues, particularly in connection with the documentation process" in the preparation for a SAS 70 review. SAS 70 reports are provided for services firms, including: bank trust departments that invest and service assets for employee benefit plans, mortgage bankers that service mortgages for others, and application service providers that provide packaged software applications and a technology environment that customers use to process financial and operational transactions.

According to Ernst & Young, a SAS 70 report is primarily an auditor-to-auditor communication and is designed to provide information and assurance to the auditors of the financial statements of user organizations to enable those auditors to obtain an understanding of the service organization's internal control. SAS 70 reports come in two flavors. Type I reports include the service auditor's opinion on the fairness of the presentation of the service organization's description of controls and the suitability of the design of the controls to achieve the specified control objectives. Type II SAS 70 reports include the information contained in a Type I report and also inlcudes the service auditor's opinion on whether the specific controls were operating effectively, according the E&Y Web site.

Bisys officials told the board of directors of the issue and the board formed a special committee of independent directors to conduct an independent investigation.

"The company takes issues of this type very seriously," said Russ Fradin, Bisys president and CEO. "By bringing this development to the attention of our board of directors, we are following recommended and appropriate corporate governance procedures. The special committee has engaged independent counsel to assist in the investigation and is making every effort to file its form 10-K on or before September 28, 2004, the end of the filing extension period. 

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