Proctor and Gamble 2006 Annual Report Download - page 25

The Procter &Gamble Company and Subsidiaries 23
Management assessed the effectiveness of the Company’s internal
control over financial reporting as of June 30, 2006 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, 2006 based
on these criteria.
Deloitte &Touche LLP, an independent registered public accounting firm,
has audited the effectiveness of the Company’s internal control over
financial reporting and management’s assessment of the effectiveness
of the Company’s internal control over financial reporting as of June 30,
2006, as stated in their report which is included herein.
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.
Strong internal controls is an objective that 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. The Company’s internal control over financial reporting
includes a Control Self Assessment Program that is conducted
annually by substantially all areas of the Company and is audited by
the internal audit function. Management takes the appropriate action
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 fraud may occur that are not
detected. Also, because of changes in conditions, internal control
effectiveness may vary over time.
A.G.Lafley ClaytonC.Daley,Jr.
Chairman of the Board, Chief Financial Officer
President and Chief Executive
August 8, 2006
Management’s Report on Internal Control over Financial Reporting
flows for each of the three years in the period ended June 30, 2006,
in conformity with accounting principles generally accepted in the
United States of America.
As discussed in Note 1, the accompanying consolidated financial
statements have been retrospectively adjusted for the adoption of
SFAS No. 123 (Revised 2004), “Share-Based Payment” and the change
in the Company’s method of accounting for Treasury Stock in order to
present Treasury Stock as a separate component of Shareholders’ Equity.
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, 2006, 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 8, 2006 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.
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, 2006 and 2005, and the related consolidated statements
of earnings, shareholders’ equity, and cash flows for each of the three
years in the period ended June 30, 2006. 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, 2006 and 2005, and the results of its operations and cash
Report of Independent Registered Public Accounting Firm
Cincinnati, Ohio
August 8, 2006