GE 2005 Annual Report Download - page 146

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(146)
Report of Independent Registered Public Accounting Firm
To Shareowners and Board of Directors of General Electric Company:
We have audited management’ s restated assessment, included in the accompanying Management’ s Annual Report
on Internal Control over Financial Reporting (as restated) that General Electric Company and consolidated affiliates
(“GE”) did not maintain effective internal control over financial reporting as of December 31, 2005, because of the
effect of the material weakness identified in management’ s restated assessment, based on criteria established in
Internal Control − Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). GE management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is
to express an opinion on management’ s assessment and an opinion on the effectiveness of GE’ s internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, evaluating management’ s
assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company’ s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’ s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’ s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of control deficiencies, that results in more
than a remote likelihood that a material misstatement of the annual or interim financial statements will not be
prevented or detected. Management has identified and included in its restated assessment the following material
weakness as of December 31, 2005: a failure to ensure adequately designed procedures to designate, with the
specificity required by Statement of Financial Accounting Standards No. 133, each hedged commercial paper
transaction. This material weakness resulted in restatements of the Company's previously issued consolidated
financial statements as of December 31, 2005 and 2004, and for each of the years in the three-year period ended
December 31, 2005 and the financial information for each of the quarters in 2005 and 2004.