APC 2006 Annual Report Download - page 154

Consolidated financial statements at December 31, 2006
6. Report of the Statutory Auditors
on the consolidated financial statements
This is a free translation into English of the statutory
auditors’ report issued in the French language and is
provided solely for the convenience of English speak-
ing readers.This report includes information specifical-
ly required by French law in all audit reports, whether
qualified or not, and this is presented below the opin-
ion on the financial statements. This information
includes explanatory paragraphs discussing the audi-
tors’ assessment of certain significant accounting mat-
ters. These assessments were made for the purpose
of issuing an opinion on the financial statements taken
as a whole and not to provide separate assurance on
individual account captions or on information taken
outside of the consolidated financial statements. The
report also includes information relating to the specific
verification of information in the group management
report. This report should be read in conjunction with,
and is construed in accordance with French law and
professional auditing standards applicable in France.
To the Shareholders,
In compliance with the assignment entrusted to us by
the Annual Shareholders’ Meeting we have audited the
accompanying consolidated financial statements of
Schneider Electric SA for the year ended December
31, 2006.
These consolidated financial statements have been
approved by the Management Board. Our role is to
express an opinion on these financial statements
based on our audit.
I . - Opinion on the financial statements
We conducted our audit in accordance with the profes-
sional standards applicable in France; those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence support-
ing the amounts and disclosures in the financial state-
ments. An audit also includes assessing the account-
ing principles used and significant estimates made by
the management, as well as evaluating the overall
financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial
position of the company at December 31, 2006 and the
results of the consolidated group for the year then
ended, in accordance with IFRS as adopted by the
European Union.
II. - Justification of assessments
In accordance with the requirements of Article L. 823-9
of French Commercial Code (Code de commerce)
relating to the justification of our assessments, we
bring to your attention the following matters:
Note 1.8 to the consolidated financial statements
explains the method for recognizing research and
development costs and describes the criteria under
which development costs may be capitalized. We
reviewed the data and assumptions used to identify
development costs that qualify for capitalization, as
well as the Group’s calculations, and obtained assur-
ance that adequate disclosure is made in the notes to
the consolidated financial statements.
As explained in note 1.10 to the consolidated financial
statements, intangible assets and goodwill are tested
for impairment at least once a year and when factors
exist indicating that the related assets may have suf-
fered a loss of value. We reviewed, on a test basis, the
indicators of a loss of value and the other information
evidencing the absence of any loss of value.
As explained in note 1.21 to the consolidated financial
statements, and in the absence of any specific IFRS
recommendation, commitments to buy out minority
shareholders have been recognized in debt for an
amount corresponding to the purchase price of the
minority interests and the share in the acquired net
assets has been posted to goodwill without re-measur-
ing the acquired assets and liabilities. We verified the
estimates used in recognizing the additional goodwill
and debt corresponding to the commitment and
obtained assurance that the option selected by the
Group is adequately disclosed in the notes to the con-
solidated financial statements.
As indicated in notes 1.14 and 12.3 to the consolidat-
ed financial statements, future tax benefits arising from
the utilization of tax loss carry forwards are recognized
only when they can reasonably be expected to be real-
ized. We obtained assurance about the reasonable-
ness of the assumptions used to produce the estimate
of future taxable income used to support assessments
of the recoverability of these deferred tax assets.
Notes 1.17 and 15 describe the method for valuing
pensions and other post-employment obligations.
Actuarial valuations were performed for these commit-
ments. We reviewed the data, assumptions used, and
calculations made, and obtained assurance that ade-
quate disclosure is made in the notes to the consoli-
dated financial statements.
Note 25 ("Other operating income / expense") states
the amount of restructuring costs recorded in 2006.We
verified that, based on currently available information,
these costs concern restructuring measures initiated
or announced before December 31, 2006, for which
provisions have been recorded based on an estimate
of the costs to be incurred. We also reviewed the data
and assumptions used by the Group to make these
estimates.
The assessments were thus made in the context of the
performance of our audit of the consolidated financial
statements taken as a whole and therefore contributed
to the formation of our audit opinion expressed in the
first part of this report.
III. - Specific verification
In accordance with professional standards applicable
in France, we have also verified the information given
in the business review. We have no matters to report
regarding its fair presentation and conformity with the
consolidated financial statements.
Courbevoie and Neuilly-sur-Seine, February 20, 2007
The Statutory Auditors
Mazars & Guérard Ernst & Young et Autres
Pierre Sardet Christian Chochon
Jean-Louis Simon Pierre Jouanne
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