Alcoa 1997 Annual Report Download - page 38

36
Management ’s Report to
Alco a Shareholders
Th e accom p anyin g fin ancial statem ents of
Alcoa a n d con solidat ed su b sid ia r ie s w er e
prep ar ed by m a nagem ent , wh ich is resp on-
sible for th e ir in te gr it y a n d object ivit y. T he
st ate m en t s were p rep ared in accorda n ce
w it h gen e ra lly accep te d accou n t in g p r in ci-
p le s a n d in clu d e a m ou n t s t h at a r e b a s e d
o n m a n a g em e n t ’s b est ju dgm e n t s a n d
est im at es. Th e ot h e r fin a n cia l in fo r m a t ion
in clu de d in th is a n n u a l r ep or t is con s ist en t
w it h t h at in t h e fin a n cia l s t at e m e n t s .
Th e com pany m a int a in s a system of
in t er n a l con t r ols , in clu d in g a ccou n t in g
con t rols, a n d a st r ong p rogr am of int er n a l
au d it in g. T h e syste m of con t r ols p r ov ide s
for ap p rop r ia te p r oce du r es t h at a re con s is-
te nt w it h h igh st a n da rd s of a ccou n t in g
a n d ad m in ist r at ion . Th e com p a n y b elieves
t h at it s syst em of in te r n al con t r ols p rov ide s
rea son able a s su ra n ce t h at a ss et s a re s afe -
gu a rd ed a ga in s t los se s fr om u n au t h or ize d
u s e o r d isp os it ion a n d t h at fin a n cia l
records a re reliable for u se in p rep ar in g
fin a n c ia l st at e m e n t s.
Man agem en t a lso recogn izes its
r esp on s ib ilit y for con du ct in g t h e com p a n y’s
a ffa ir s accord in g t o t h e h igh est st a n da rd s
of p er s on al a n d cor p ora te con du c t . T h is
r esp on s ib ilit y is ch a ract er ize d a n d refl ect e d
in key policy st atem ents issu ed from t im e
to t im e rega rd in g, a m on g ot h er t h in gs,
con du ct of it s bu s in e ss a ct iv it ie s w it h in
t h e law s of t h e h os t cou n t r ie s in wh ich
t h e com p a n y op e rat es a n d p ot en t ia lly
con flict in g out side bu sin es s inter est s of
its em ployees. The com p any m a int a in s
a syste m at ic progra m to assess com plian ce
w it h t h es e p olicie s.
Pa u l H . O’Neill
Ch a ir m a n of t h e Boa rd a n d
Ch ief Execu t ive Office r
Rich a r d B. Kels on
Exe cu t ive Vice Pres ide nt a n d
Ch ie f Fin a n c ia l Office r
Aud it Co mm it t e e Re p or t In de p end en t Acco unt a nt ’s Rep o r t
To t h e Sh a reh olde rs a n d Boa rd of Dire ct or s
Alu m inu m Com pan y of Am er ica (Alcoa)
We h ave a u d it e d t h e a ccom p a n yin g
con solidated bala nce sh eet of Alcoa a s of
Dece m b er 31, 1997 a n d 1996, a n d t h e rela te d
st atem e nts of con solidated incom e, share-
holders’ equ it y a nd con solidated cash flow s
for each of t h e t h ree yea rs in t h e p er iod
en ded Decem ber 31, 1997. Th ese fin a n c ia l
st at em en t s a re t h e r esp on s ib ilit y of Alco a’s
m a n agem en t . Ou r r esp on sibilit y is t o
express a n op in ion on t h ese fin a n c ia l
st at em e nt s b a se d on ou r au d it s.
We con du c t ed ou r a u d it s in acco rd an ce
w it h gen e ra lly a ccep te d au d it in g st a n da rd s.
Th os e st a n da rd s r equ ire t h at w e p lan a n d
p er fo r m t h e au d it to ob ta in r ea s on able
a ssu r an ce ab ou t wh et h e r t h e fin a n c ia l
st atem ents a re free of m ater ial m is st ate-
m e nt . An au d it in clu de s exa m in in g, on a
te st ba sis, ev ide nce su p por t in g t h e a m ou n t s
a n d d is closu r es in t h e fin a n c ia l s t at e m e n t s.
An a u dit a ls o in clu de s a ss es sin g t h e
a cco u n t in g p r in c ip le s u s e d a n d s ign ifica n t
e st im a te s m a d e b y m a n a ge m e n t , a s w e ll a s
e va lu a t in g t h e ove r a ll fin a n c ia l s t a t e m e n t
p res en tat ion . We believe t h at ou r au d it s
p rovide a r ea son able ba sis for ou r op in ion .
In ou r op in ion , t h e fin an cia l st at em en t s
refer r ed to a bove p rese nt fa irly, in all m a te -
r ia l r esp ect s, t h e con solidat ed fin a n c ia l
posit ion of Alcoa at Decem b er 31, 1997
a n d 1996, a n d t h e con s olid at ed resu lt s of
it s op e ra t ion s a n d it s ca sh fl ow s fo r each
of th e th ree yea rs in th e p er iod en ded
Decem be r 31, 1997 in con for m it y w it h
ge n e r a lly a cce p t e d a cco u n t in g p r in c ip le s.
600 Gra nt St ., Pit tsbu rgh , Pa .
Ja n u a r y 8, 1998, e xce p t fo r No te V,
forwhich the dateisFebruary6,1998
T h e Au d it Com m it t e e of t h e Boa rd of
Dire ctor s, wh ich is com p os e d of s ix in de -
pen dent director s, m et eight t im es in 1997.
Th e Au d it Com m it te e ove rs e es Alcoa’s
fin an cia l r epor t in g p roce ss on b eh alf of
t h e Boa rd of Dire ctor s. In fu lfillin g it s r esp on -
sibilit y, t h e com m ittee recom m en ded to
t h e Bo ard t h e r ea pp oin t m e nt of Coop e rs &
Lyb ra n d L.L.P. a s t h e com p a n y’s in d ep e n de nt
p u blic accou n t a n t s. T h e Au d it Com m it t e e
reviewed w it h th e Vice President –Au d it a n d
t h e in dep en de n t a ccou n t a n ts t h e overa ll
scop e a n d sp e cific p la n s for t h e ir resp ect ive
a u d it s . T h e co m m it t e e r e v ie w e d w it h
m an agem e nt Alcoa’s a n n u a l a n d q u a r t e rly
r ep or t in g p roces s, a n d t h e ade qu a cy of
t h e com p a ny’s in t e r n a l con t r ols . W it h ou t
m an agem ent p resent , th e com m ittee m et
s ep arat ely w it h t h e Vice Pr es ide nt –Au d it
a n d t h e in de pe n de nt accou n t a n ts t o r eview
t h e r esu lt s of t h e ir exa m in at ion s, t h e ir
eva lu at ion s of t h e com p a n y’s in t e r n a l
co n t r ols, a n d t h e ove r a ll qu a lit y o f Alcoa’s
fin a n c ia l r ep o r t in g.
HenryB.Schacht
Ch a ir m a n , Au d it Com m it te e