LabCorp 2006 Annual Report Download - page 31

Laboratory Corporation of America® Holdings 2006 29
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To the Board of Directors and Shareholders of
Laboratory Corporation of America Holdings:
We have completed integrated audits of Laboratory Corporation of
America Holdings’ consolidated financial statements and of its internal
control over financial reporting as of December 31, 2006, in accordance
with the standards of the Public Company Accounting Oversight Board
(United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements and financial statement schedule
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Laboratory Corporation of America Holdings and its subsidiar-
ies at December 31, 2006 and 2005, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 2006 in conformity with accounting principles generally
accepted in the United States of America. These financial statements
and financial statement schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these finan-
cial statements and financial statement schedule based on our audits.
We conducted our audits of these statements 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 the financial statements
are free of material misstatement. An audit of financial statements
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As discussed in Note 14 to the consolidated financial statements,
the Company changed the manner in which it accounts for share-based
compensation in 2006.
As discussed in Note 16 to the consolidated financial statements,
the Company changed the manner in which it accounts for defined
benefit and other post-retirement plans as of December 31, 2006.
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in Management’s
Report on Internal Control Over Financial Reporting appearing under Item
9A, that the Company maintained effective internal control over financial
reporting as of December 31, 2006 based on criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), is fairly stated, in all
material respects, based on those criteria. Furthermore, in our opinion,
the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2006, based on criteria estab-
lished in Internal Control – Integrated Framework issued by the COSO. The
Company’s 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
opinions on management’s assessment and on the effectiveness of the
Company’s internal control over financial reporting based on our audit. We
conducted our audit of internal control over financial reporting in accor-
dance 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.
An audit of internal control over financial reporting includes obtaining
an understanding of internal control over financial reporting, evaluating
management’s assessment, testing and evaluating the design and operat-
ing effectiveness of internal control, and performing such other procedures
as we consider necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
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 (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.
PricewaterhouseCoopers LLP
Greensboro, North Carolina
February 26, 2007
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM