Philips 2006 Annual Report Download - page 112

Philips Annual Report 2006112
The Board of Management of Koninklijke Philips Electronics N.V.
(the ‘Company’) is responsible for establishing and maintaining an
adequate system of internal control over fi nancial reporting (as such
term is defi ned in Rule 13a-15(f) under the US Securities Exchange
Act). Internal control over fi nancial reporting is a process to provide
reasonable assurance regarding the reliability of our fi nancial reporting
for external purposes in accordance with accounting principles
generally accepted in the United States of America (US GAAP).
Internal control over fi nancial reporting includes maintaining records
that in reasonable detail accurately and fairly refl ect our transactions;
providing reasonable assurance that transactions are recorded as
necessary for preparation of our fi nancial statements; providing
reasonable assurance that receipts and expenditures of company
assets are made in accordance with management authorization; and
providing reasonable assurance that unauthorized acquisition, use
or disposition of company assets that could have a material effect
on our fi nancial statements would be prevented or detected on a
timely basis. Because of its inherent limitations, internal control over
fi nancial reporting is not intended to provide absolute assurance that
a misstatement of our fi nancial statements would be prevented
or detected.
The Board of Management conducted an assessment of the Company’s
internal control over fi nancial reporting based on the Internal Control –
Integrated Framework established by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that
assessment, the Board of Management concluded that, as of December
31, 2006, the Company’s internal control over US GAAP fi nancial
reporting is considered effective.
The Board of Management’s assessment of the effectiveness of the
Company’s internal control over fi nancial reporting as of December
31, 2006, excluded the following companies acquired by the Company
after January 1, 2006: Lifeline Systems, Witt Biomedical Corporation,
Intermagnetics General Corporation, Avent, Bodine and PowerSentry.
These acquisitions are wholly-owned subsidiaries of the Company
whose total assets represented 5% of consolidated total assets and
less than 1% of consolidated net sales of the Company as of and for
the year ended December 31, 2006. If adequately disclosed, companies
are allowed to exclude acquisitions from their assessment of internal
control over fi nancial reporting during the fi rst year of an acquisition
while integrating the acquired company under guidelines established
by the US Securities and Exchange Commission.
The Board of Management’s assessment of the effectiveness of the
Company’s internal control over US GAAP fi nancial reporting as
of December 31, 2006, as included in this chapter Group fi nancial
statements, has been audited by KPMG Accountants N.V., an
independent registered public accounting fi rm, as stated in their
report which follows hereafter.
February 19, 2007
Board of Management
112 Group fi nancial statements
- Management’s report
- Auditors’ report
172 IFRS information 218 Company fi nancial statements
Management’s report on internal control over
fi nancial reporting pursuant to section 404 of the
US Sarbanes-Oxley Act
Group fi nancial statements