Proctor and Gamble 2002 Annual Report Download - page 18

Procter & Gamble is committed to doing what’s right. Our actions – the
actions of all employees – are governed by our Purpose, Values and
Principles. These core values set a tone of integrity for the entire
Company – one that is reinforced consistently at all levels, in all coun-
tries, internally and externally.
Importantly, this extends to our accounting and financial reporting
responsibilities. We understand our responsibilities to investors. As part
of this, we are committed to providing accurate and understandable
financial reporting. This encompasses:
Maintaining a strong internal control environment. Our system of internal
controls is designed to provide reasonable assurance that transactions
are executed as authorized and accurately recorded, and that assets are
safeguarded. We monitor these controls through self-assessments and an
ongoing program of internal and external audits. Key employee responsi-
bilities are reinforced through the Company’s “Worldwide Business Con-
duct Manual,” which sets forth management’s commitment to conduct
its business affairs with the highest ethical standards.
Focusing on financial stewardship. Even before the events that have
shaken investor confidence, we had implemented a program to ensure
employees understood their fiduciary responsibilities to shareholders.
This ongoing effort encompasses financial discipline in our strategic and
daily business decisions, and brings particular focus to maintaining
accurate accounting processes through process improvement, skill
development and oversight.
Exerting rigorous oversight of the business. We continuously review our
business results and strategic choices. Our Global Leadership Council is
actively involved – from understanding strategies to reviewing key initia-
tives and financial performance. The intent is to ensure we remain objec-
tive in our assessments, constructively challenge the approach to busi-
ness opportunities and potential issues, and monitor results and controls.
Encouraging strong and effective Corporate Governance from our Board
of Directors. We have an active, capable and diligent Board. We already
meet the standards being proposed for independence, and we welcome
the Board’s oversight as a representative of the shareholders. Our Audit
Committee is comprised of independent directors with the financial
knowledge and experience to provide appropriate oversight. We review
key accounting, financial reporting and internal control matters with
them and encourage their independent discussions with Deloitte &
Touche, our external auditors.
Providing investors with financial results that are complete and under-
standable. The consolidated financial statements and financial informa-
tion included in this report are the responsibility of management. This
includes preparing the financial statements in accordance with general-
ly accepted accounting principles in the United States of America, which
necessarily requires estimates based on management’s best judgment.
Our independent auditing firm, Deloitte & Touche, has audited our
financial statements and has expressed an unqualified opinion. We are
committed to providing timely, accurate and understandable informa-
tion to investors.
P&G has a strong history of doing what’s right. We know great compa-
nies are built on strong ethical standards and principles. Our financial
results are delivered from that culture of accountability, and we take
responsibility for the quality and accuracy of our financial reporting.
16 The Procter & Gamble Company and Subsidiaries
Corporate Governance and Management’s Responsibility
Table of Contents
Financial Review
Results of Operations 17
Financial Condition 18
Segment Results 20
Critical Accounting Policies 22
Hedging and Derivative Financial Instruments 23
Restructuring Program 24
Independent Auditors’ Report 26
Audited Consolidated Financial Statements
Earnings 27
Balance Sheet 28
Shareholders’ Equity 30
Cash Flows 31
Notes to the Financial Statements 32
A.G. Lafley
Chairman of the Board,
President and Chief Executive
Clayton C. Daley Jr.
Chief Financial Officer