Canon 2006 Annual Report Download - page 93

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The Board of Directors and Stockholders of
Canon Inc.
We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over
Financial Reporting, that Canon Inc. and subsidiaries (the “Company”) maintained effective internal control over financial
reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the
effectiveness of the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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 effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Acompany’s internal control over financial reporting is a process 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) 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 (3) 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.
In our opinion, management’s assessment that Canon Inc. and subsidiaries maintained effective internal control over financial
reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion,
Canon Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December
31, 2006, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
accompanying consolidated balance sheets of Canon Inc. and subsidiaries as of December 31, 2006 and 2005, and the related
consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December
31, 2006, all expressed in Japanese yen, and our report thereon dated March 16, 2007 stated that, except for the omission of
segment information required by Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information,” the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Canon Inc. and subsidiaries at December 31, 2006 and 2005, and the consolidated results of
their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S.
generally accepted accounting principles.
March 16, 2007
91
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM