Avon 2006 Annual Report Download - page 41

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control over financial reporting. However, these inherent limi-
tations are known features of the financial reporting process,
and it is possible to design into the process safeguards to reduce,
though not eliminate, this risk.
Under the supervision and with the participation of our manage-
ment, including its principal executive and principal financial
officers, we assessed as of December 31, 2006, the effectiveness
of our internal control over financial reporting. This assessment
was based on criteria established in the framework in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based
on our assessment using those criteria, our management con-
cluded that our internal control over financial reporting as of
December 31, 2006 was effective.
Avon’s assessment of the effectiveness of Avon’s internal control
over financial reporting as of December 31, 2006 has been aud-
ited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report which is included
on page F-2 of this 2006 Annual Report on Form 10-K.
Changes in Internal Control over Financial
Reporting
Management has evaluated, with the participation of our princi-
pal executive and principal financial officers, whether any
changes in our internal control over financial reporting that
occurred during our last fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes
have occurred.
We are implementing an Enterprise Resource Planning (“ERP”)
system on a worldwide basis, which is expected to improve the
efficiency of our supply chain and financial transaction processes.
The implementation is expected to occur in phases over the next
several years. The implementation of a worldwide ERP system
will likely affect the processes that constitute our internal control
over financial reporting and will require testing for effectiveness.
We implemented the ERP system in Poland during the third quar-
ter of 2006 after having implemented in Germany in 2005. As
with any new information technology application we implement,
this application, along with the internal controls over financial
reporting included in this process, were appropriately tested for
effectiveness prior to the implementation in Poland. We con-
cluded, as part of our evaluation described in the above para-
graph, that the implementation of ERP in Poland has not
materially affected our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
A V O N 2006 35