Philips 2014 Annual Report Download - page 107

Group nancial statements 12.2
Annual Report 2014 107
12.3 Independent auditors’ report on
internal control over nancial
reporting
Report of Independent Registered Public
Accounting Firm
To: The Supervisory Board and Shareholders of
Koninklijke Philips N.V.
We have audited Koninklijke Philips N.V.’s internal
control over nancial reporting as of December 31, 2014,
based on criteria established in Internal Control —
Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway
Commission (COSO). Koninklijke Philips N.V.’s
management is responsible for maintaining eective
internal control over nancial reporting and for its
assessment of the eectiveness of internal control over
nancial reporting, included in the accompanying
section 12.1, “Management’s report on internal control”,
of this Annual Report. Our responsibility is to express
an opinion on the Company’s internal control over
nancial 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 eective internal control over
nancial reporting was maintained in all material
respects. Our audit included obtaining an
understanding of internal control over nancial
reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and
operating eectiveness of internal control based on the
assessed risk. Our audit also included 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 nancial reporting is
a process designed to provide reasonable assurance
regarding the reliability of nancial reporting and the
preparation of nancial statements for external
purposes in accordance with generally accepted
accounting principles. A company’s internal control
over nancial reporting includes those policies and
procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly
re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 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 eect on the nancial statements.
Because of its inherent limitations, internal control over
nancial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
eectiveness 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.
Koninklijke Philips N.V. acquired Philips Lighting Saudi
Arabia (PLSA), formerly known as General Lighting
Company (GLC) during 2014 and management
excluded from its assessment of the eectiveness of
Koninklijke Philips N.V.’s internal control over nancial
reporting as of December 31, 2014, PLSA’s internal
control over nancial reporting associated with total
assets of approximately 1.5% of consolidated total
assets and sales of less than 1.0% of consolidated sales
included in the consolidated nancial statements of
Koninklijke Philips N.V. and subsidiaries as of and for the
year ended December 31, 2014. Our audit of internal
control over nancial reporting of Koninklijke Philips
N.V. also excluded an evaluation of the internal control
over nancial reporting of PLSA.
In our opinion, Koninklijke Philips N.V. maintained, in all
material respects, eective internal control over
nancial reporting as of December 31, 2014, based on
criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(COSO).
We also have audited, in accordance with the standards
of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of
Koninklijke Philips N.V. and subsidiaries as of December
31, 2014 and 2013, and the related consolidated
statements of income, comprehensive income, cash
ows, and changes in equity for each of the years in the
three-year period ended December 31, 2014, and our
report dated February 24, 2015, expressed an
unqualied opinion on those consolidated nancial
statements.
Amsterdam, The Netherlands
February 24, 2015
KPMG Accountants N.V.