Proctor and Gamble 2005 Annual Report Download - page 27

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Management’s฀Discussion฀and฀Analysis The฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries 23
Report฀of฀Independent฀Registered฀Public฀Accounting฀Firm
The฀Procter฀&฀Gamble฀Company฀and฀Subsidiaries
Management฀is฀responsible฀for฀establishing฀and฀maintaining฀adequate฀
internal฀control฀over฀financial฀reporting฀of฀The฀Procter฀&฀Gamble฀
Company฀(as฀defined฀in฀Rule฀13a-15(f)฀under฀the฀Securities฀Exchange฀
Act฀of฀1934,฀as฀amended).฀Our฀internal฀control฀over฀financial฀reporting฀
is฀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฀in฀the฀United฀States฀of฀America.฀
We฀expect฀each฀employee฀to฀be฀accountable฀for฀ensuring฀strong฀
internal฀controls.฀This฀objective฀is฀reinforced฀through฀our฀Worldwide฀
Business฀Conduct฀Manual,฀which฀sets฀forth฀our฀commitment฀to฀
conduct฀business฀with฀integrity฀and฀within฀both฀the฀letter฀and฀the฀spirit฀
of฀the฀law.฀Our฀internal฀control฀system,฀which฀is฀supported฀with฀written฀
policies฀and฀procedures,฀contains฀a฀Control฀Self฀Assessment฀Program฀
conducted฀annually฀by฀substantially฀all฀areas฀of฀the฀Company฀and฀is฀
audited฀by฀the฀internal฀audit฀function.฀Appropriate฀actions฀are฀taken฀by฀
management฀to฀correct฀any฀identified฀control฀deficiencies.
Because฀of฀its฀inherent฀limitations,฀any฀system฀of฀internal฀control฀over฀
financial฀reporting,฀no฀matter฀how฀well฀designed,฀may฀not฀prevent฀
or฀detect฀misstatements฀due฀to฀the฀possibility฀that฀a฀control฀can฀be฀
circumvented฀or฀overridden฀or฀that฀misstatements฀due฀to฀error฀or฀
Management’s฀Report฀on฀Internal฀Control฀over฀Financial฀Reporting
fraud฀may฀occur฀that฀are฀not฀detected.฀Also,฀because฀of฀changes฀in฀
conditions,฀internal฀control฀effectiveness฀may฀vary฀over฀time.
Management฀assessed฀the฀effectiveness฀of฀the฀Company’s฀internal฀
control฀over฀financial฀reporting฀as฀of฀June฀30,฀2005฀using฀criteria฀
established฀in฀
Internal฀Control-Integrated฀Framework
฀issued฀by฀the฀
Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀
(COSO)฀and฀concluded฀that฀the฀Company฀maintained฀effective฀
internal฀control฀over฀financial฀reporting฀as฀of฀June฀30,฀2005฀based฀on฀฀
these฀criteria.
Our฀internal฀control฀over฀financial฀reporting฀as฀of฀June฀30,฀2005,฀as฀
well฀as฀our฀assessment฀of฀the฀effectiveness฀of฀our฀internal฀control฀over฀
financial฀reporting฀as฀of฀June฀30,฀2005,฀have฀been฀audited฀by฀Deloitte฀
&฀Touche฀LLP,฀an฀independent฀registered฀public฀accounting฀firm,฀as฀
stated฀in฀the฀report฀which฀is฀included฀herein.
A.G.฀Lafley฀Clayton฀C.฀Daley,฀Jr.
Chairman฀of฀the฀Board,฀Chief฀Financial฀Officer
President฀and฀Chief฀Executive
August฀9,฀2005
To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀฀
The฀Procter฀&฀Gamble฀Company
We฀have฀audited฀the฀accompanying฀consolidated฀balance฀sheets฀of฀
The฀Procter฀&฀Gamble฀Company฀and฀subsidiaries฀(the฀“Company”)฀as฀
of฀June฀30,฀2005฀and฀2004,฀and฀the฀related฀consolidated฀statements฀
of฀earnings,฀shareholders’฀equity฀and฀cash฀flows฀for฀each฀of฀the฀three฀
years฀in฀the฀period฀ended฀June฀30,฀2005.฀These฀financial฀statements฀
are฀the฀responsibility฀of฀the฀Company’s฀management.฀Our฀responsibility฀
is฀to฀express฀an฀opinion฀on฀these฀financial฀statements฀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฀audit฀to฀obtain฀
reasonable฀assurance฀about฀whether฀the฀financial฀statements฀are฀
free฀of฀material฀misstatement.฀An฀audit฀includes฀examining,฀on฀a฀test฀
basis,฀evidence฀supporting฀the฀amounts฀and฀disclosures฀in฀the฀financial฀
statements.฀An฀audit฀also฀includes฀assessing฀the฀accounting฀principles฀
used฀and฀significant฀estimates฀made฀by฀management,฀as฀well฀as฀
evaluating฀the฀overall฀financial฀statement฀presentation.฀We฀believe฀that฀
our฀audits฀provide฀a฀reasonable฀basis฀for฀our฀opinion.
In฀our฀opinion,฀such฀consolidated฀financial฀statements฀present฀fairly,฀
in฀all฀material฀respects,฀the฀financial฀position฀of฀the฀Company฀at฀June฀
30,฀2005฀and฀2004,฀and฀the฀results฀of฀its฀operations฀and฀cash฀flows฀
for฀each฀of฀the฀three฀years฀in฀the฀period฀ended฀June฀30,฀2005,฀in฀
conformity฀with฀accounting฀principles฀generally฀accepted฀in฀the฀United฀
States฀of฀America.
We฀have฀also฀audited,฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀
Company฀Accounting฀Oversight฀Board฀(United฀States),฀the฀effectiveness฀
of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀as฀of฀June฀30,฀
2005,฀based฀on฀the฀criteria฀established฀in฀Internal฀Control—Integrated฀
Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀
of฀the฀Treadway฀Commission฀and฀our฀report฀dated฀August฀9,฀2005฀
expressed฀an฀unqualified฀opinion฀on฀management’s฀assessment฀of฀the฀
effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀
and฀an฀unqualified฀opinion฀on฀the฀effectiveness฀of฀the฀Company’s฀
internal฀control฀over฀financial฀reporting.฀
Cincinnati,฀Ohio฀฀ August฀9,฀2005