AutoNavi's nationwide digital map database and proprietary technology platform have made us a market leader providing comprehensive, integrated navigation and location-based solutions to the Chinese market. Our products and services boast a wide range of applications including in-dash navigation systems, portable navigation devices, mobile and Internet location-based services, and public sector and enterprise applications. As a result, our products have begun to play a vital role in the lives of many Chinese people. More information can be found under Our Solutions of Company's website at http://www.autonavi.com/en/MS_128.html.
AutoNavi is committed to the highest standards of corporate governance and our internal control system is an integral part of our assurance of transparency and quality in our internal processes. Since our initial public offering, AutoNavi has implemented a number of measures to ensure the quality of our internal control procedures.
These measures include the following:
Hired additional accounting personnel with strong analytical skills and extensive experience in U.S. GAAP and SEC reporting requirements;
Provided training on an ongoing basis to our accounting personnel covering a broad range of accounting and financial reporting topics to ensure that they are up-to-date with current and new regulations;
Engaged one of the major international accounting firms to serve as our external consultant on internal control matters to supplement our existing internal control team with Section 404 readiness services;
Expanded our internal control team by hiring two managers with a specialization in internal control and experience at major international accounting firms;
Established an audit committee consisting solely of independent directors and appointed Dr. Daqing Dave Qi, a professor of accounting and member of the American Accounting Association, as chair of our audit committee, leveraging his deep financial expertise.
Enhancing the accounting manuals with more detailed guidance on accounting policies and procedures
As a US listing company, we are subject to the internal control requirements of Section 404 of the Sarbanes-Oxley Act. In year 2011, our independent registered public accounting firm(DTT) conducted an assessment based on criteria established in COSO , and they conclude that, as of December 31, 2011, our internal control over financial reporting was effective.
Furthermore, underscoring our commitment to maintaining the quality of our internal control, we will continue to expand our team to strengthen our internal control structure and procedures for financial reporting over time.
AutoNavi currently has four independent directors on its seven-member board of directors. As a matter of policy and consistent with applicable laws, rules and regulations, the Board consists of a majority of independent directors. Each of our audit, compensation, and nominating and corporate governance committees, is entirely comprised of independent directors. More information can be found under the Board of Directors and Corporate Governance sections of Company's website at http://www.autonavi.com/en/MS_137_3.html
We have two consolidated variable interest entities in China, namely, AutoNavi Software Co., Ltd. and Beijing MapABC Technology Co., Ltd. These two consolidated variable interest entities and their subsidiaries contribute a majority of our net revenues and net income for the year ended December 31, 2011. For a description of the contractual arrangements with these two entities, see our annual report on Form 20-F for the year ended December 31, 2011 under "Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contractual Arrangements with Our PRC Variable Interest Entities and Their Shareholders."
We were not and are not subject to any ongoing SEC investigations, and we do not think the SEC's administrative proceedings against the accounting firms resulted from, or otherwise specifically relate, to our company or our financial statements. However, we may be affected by the outcome of these proceedings, along with many other U.S.-listed Chinese companies, as well as U.S. investors, U.S. stock exchanges, and U.S.-listed multinationals with significant operations in China.