Avid 2005 Annual Report Download - page 59

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45
Management’s Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act
of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers
and effected by the Company’s board of directors, management and other personnel, 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 and includes those policies and procedures that:
•฀ Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of the assets of the Company;
•฀ Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and
•฀ Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December
31, 2005. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Management’s assessment of internal
control over financial reporting excluded Pinnacle Systems Inc. (Pinnacle) and its subsidiaries because Pinnacle was acquired by
the Company in a purchase business combination during 2005. Pinnacle and its subsidiaries represented 38% and 12% of the
Company’s total assets and total revenues, respectively, as of and for the year ended December 31, 2005. Excluding identifiable
intangible assets and goodwill recorded in the business combination, Pinnacle and its subsidiaries represented 10% of the
Company’s total assets as of December 31, 2005.
Based on our assessment, management has concluded that, as of December 31, 2005, the Company’s internal control over financial
reporting is effective based on the criteria set forth by the COSO.
Our management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31,
2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which appears on page 46 of this Annual Report on Form 10-K.