CVS 2005 Annual Report Download - page 26

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We are responsible for establishing and maintaining effective internal control over financial reporting. Our
Company’s internal control over financial reporting includes those policies and procedures that pertain to the
Company’s ability to record, process, summarize and report a system of internal accounting controls and
procedures to provide reasonable assurance, at an appropriate cost/benefit relationship, that the unauthorized
acquisition, use or disposition of assets are prevented or timely detected and that transactions are authorized,
recorded and reported properly to permit the preparation of financial statements in accordance with
generally accepted accounting principles (GAAP) and receipt and expenditures are duly authorized. In
order to ensure the Company’s internal control over financial reporting is effective, management regularly
assesses such controls and did so most recently for its financial reporting as of December 31, 2005.
We conduct an evaluation of the effectiveness of our internal controls over financial reporting based
on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. This evaluation included review of the documentation,
evaluation of the design effectiveness and testing of the operating effectiveness of controls. Our system
of internal control over financial reporting is enhanced by periodic reviews by our internal auditors, written
policies and procedures and a written Code of Conduct adopted by our Company’s Board of Directors,
applicable to all employees of our Company.
In addition, we have an internal Disclosure Committee, comprised of management from each functional
area within the Company, which performs a separate review of our disclosure control and procedures.
There are inherent limitations in the effectiveness of any system of internal controls over financial reporting.
Based on our evaluation, we conclude our Company’s internal control over financial reporting is effective
and provides reasonable assurance that assets are safeguarded and that the financial records are reliable
for preparing financial statements as of December 31, 2005.
KPMG LLP, independent registered public accounting firm, is appointed by the Board of Directors and
ratified by our Company’s shareholders. They were engaged to render an opinion regarding the fair
presentation of our consolidated financial statements as well as conducting a review of the system of
internal accounting controls. Their accompanying report is based upon an audit conducted in accordance
with the Public Company Accounting Oversight Board (United States) and includes an attestation on
management’s assessment of internal controls over financial reporting.
March 14, 2006
24
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
CVS CORPORATION 2005 ANNUAL REPORT