ADT 2002 Annual Report Download - page 42

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The financial statements of Tyco International Ltd. and its subsidiaries are the responsibility of the
Company’s management and have been prepared in accordance with generally accepted accounting
principles in the United States of America.
Management is responsible for the integrity and objectivity of the financial statements, including
estimates and judgments reflected in them and fulfills this responsibility primarily by establishing and
maintaining accounting systems and practices adequately supported by internal accounting controls. We
take these responsibilities very seriously and are committed to building ourselves as a recognized leader
in governance, controls and clarity and transparency of financial statements. We have just begun this
mission and it will take some time to develop and additional time to permeate the entire organization
globally. Internal controls are designed to provide reasonable assurance that the Company’s assets are
safeguarded, that transactions are executed in accordance with management’s authorizations and that
the financial records are reliable for the purpose of preparing financial statements. Even an effective
internal control system, no matter how well designed, has inherent limitations, including the possibility
of the circumvention or overriding of controls and, therefore, can provide only reasonable assurance
with respect to financial statement preparation and such safeguarding of assets.
The Company assessed its internal control system within the past 90 days. Based on this
assessment, management believes the internal accounting controls in use at the time of this filing are
likely to provide reasonable assurance that the Company’s assets are safeguarded, that transactions are
executed in accordance with management’s authorizations, and that the financial records are reliable
for the purpose of preparing financial statements. Such reasonable assurance is based in part on
additional procedures performed by the Company in light of the instances of breakdowns of internal
controls which occurred during fiscal 2002. We are enhancing our internal controls by implementing
additional policies and procedures to improve the assurance level. Many of the difficulties the Company
faced during fiscal 2002 highlight the business imperative of high quality controls and corporate
governance. However, given the short tenure of senior management with the Company and the ongoing
internal investigations of the Company’s controls at the time of the original filing, management had not
had the opportunity to conduct a comprehensive review of its approximately 2,300 subsidiaries. During
the quarter ended March 31, 2003, the Company intensified a process whereby internal audits and
detailed controls and operating reviews were conducted, which resulted in changes to amounts reported
in prior periods. Full assurance that control problems will not be discovered in the future cannot be
provided, although a more thorough review has been conducted.
PricewaterhouseCoopers LLP, independent accountants, are retained to audit Tyco International
Ltd.’s consolidated financial statements. Their accompanying report is based on audits conducted in
accordance with auditing standards generally accepted in the United States of America, which include
the consideration of the Company’s internal controls to establish a basis for determining the nature,
timing and extent of audit tests to be applied.
The Audit Committee of the Board of Directors, consisting of directors who are not officers or
employees of the Company, meets regularly with management, the independent accountants and the
internal auditors, to review matters relating to financial reporting, internal accounting controls and
auditing.
/s/ EDWARD D. BREEN /s/ DAVID J. FITZPATRICK
Edward D. Breen David J. FitzPatrick
Chairman and Chief Executive Officer Executive Vice President and Chief Financial Officer
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