GE 2007 Annual Report Download - page 43

ge 2007 annual report 41
Report of Independent Registered
Public Accounting Firm
To Shareowners and Board of Directors
of General Electric Company:
We have audited the accompanying statement of fi nancial position
of General Electric Company and consolidated affi liates (“GE”) as of
December 31, 2007 and 2006, and the related statements of earnings,
changes in shareowners’ equity and cash fl ows for each of the years
in the three-year period ended December 31, 2007. We also have
audited GE’s internal control over fi nancial reporting as of December 31,
2007, 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 these consolidated fi nancial statements, for maintaining effective
internal control over fi nancial reporting, and for its assessment of the
effectiveness of internal control over fi nancial reporting. Our responsi-
bility is to express an opinion on these consolidated fi nancial statements
and an opinion on GE’s internal control over fi nancial reporting based
on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain rea-
sonable assurance about whether the fi nancial statements are free of
material misstatement and whether effective internal control over
fi nancial reporting was maintained in all material respects. Our audits
of the consolidated fi nancial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the fi nancial
statements, assessing the accounting principles used and signifi cant
estimates made by management, and evaluating the overall fi nancial
statement presentation. Our audit of internal control over fi nancial
reporting included obtaining an understanding of internal control over
fi nancial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis
for our opinions.
A company’s internal control over fi nancial reporting is a process
designed to provide reasonable assurance regarding the reliability of
fi nancial reporting and the preparation of fi nancial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over fi nancial reporting includes
those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly refl ect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of fi nancial 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 fi nancial statements.
Because of its inherent limitations, internal control over fi nancial
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 pro-
cedures may deteriorate.
In our opinion, the consolidated fi nancial statements appearing on
pages 64, 66, 68, 70 –106 and the Summary of Operating Segments
table on page 47 present fairly, in all material respects, the fi nancial
position of GE as of December 31, 2007 and 2006, and the results of
its operations and its cash fl ows for each of the years in the three-
year period ended December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America. Also, in
our opinion, GE maintained, in all material respects, effective internal
control over fi nancial reporting as of December 31, 2007, based on
criteria established in Internal Control — Integrated Framework issued
by COSO.
As discussed in note 1 to the consolidated fi nancial statements,
GE, in 2007, changed its methods for accounting for uncertainty in
income taxes and for a change or projected change in the timing of
cash fl ows relating to income taxes generated by leveraged lease
transactions, and, in 2006, changed its methods of accounting for
pension and other postretirement benefi ts and for share-based
compensation.
Our audits of GE’s consolidated fi nancial statements were made
for the purpose of forming an opinion on the consolidated fi nancial
statements taken as a whole. The accompanying consolidating infor-
mation appearing on pages 65, 67 and 69 is presented for purposes
of additional analysis of the consolidated fi nancial statements rather
than to present the fi nancial position, results of operations and cash
fl ows of the individual entities. The consolidating information has been
subjected to the auditing procedures applied in the audits of the con-
solidated fi nancial statements and, in our opinion, is fairly stated in all
material respects in relation to the consolidated fi nancial statements
taken as a whole.
KPMG LLP
Stamford, Connecticut
February 20, 2008