Capital One 1997 Annual Report Download - page 40

Management’s Report on Consolidated Financial
Statements and Internal Controls Over Financial Reporting
T
he Management of Capital One Financial Corporation is respon-
sible for the preparation, integrity and fair presentation of the
financial statements and footnotes contained in this Annual Report.
The Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles and are
free of material misstatement.The Company also prepared other
information included in this Annual Report and is responsible for its
accuracy and consistency with the financial statements. In situa-
tions where financial information must be based upon estimates
and judgments, they represent the best estimates and judgments
of Management.
The Consolidated Financial Statements have been audited by the
Company’s independent public accountants, Ernst & Young LLP,
whose independent professional opinion appears separately.Their
audit provides an objective assessment of the degree to which the
Company’s Management meets its responsibility for financial
reporting.Their opinion on the financial statements is based on
auditing procedures which include reviewing accounting systems
and internal controls and performing selected tests of transactions
and records as they deem appropriate.These auditing procedures
are designed to provide reasonable assurance that the financial
statements are free of material misstatement.
Management depends on its accounting systems and internal
controls in meeting its responsibilities for reliable financial state-
ments. In Management’s opinion, these systems and controls pro-
vide reasonable assurance that assets are safeguarded and that
transactions are properly recorded and executed in accordance with
Management’s authorizations. As an integral part of these systems
and controls, the Company maintains a professional staff of inter-
nal auditors that conducts operational and special audits and coor-
dinates audit coverage with the independent auditors.
The Audit Committee of the Board of Directors, composed solely
of outside directors, meets periodically with the internal auditors,
the independent auditors and Management to review the work of
each and ensure that each is properly discharging its responsibili-
ties.The independent auditors have free access to the Committee to
discuss the results of their audit work and their evaluations of the
adequacy of accounting systems and internal controls and the qual-
ity of financial reporting.
There are inherent limitations in the effectiveness of internal
controls, including the possibility of human error or the circumven-
tion or overriding of controls. Accordingly, even effective internal
controls can provide only reasonable assurance with respect
to reliability of financial statements and safeguarding of assets.
Furthermore, because of changes in conditions, internal control
effectiveness may vary over time.
The Company assessed its internal controls over financial
reporting as of December 31, 1997, in relation to the criteria
described in the “Internal Control-Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, the Company believes that
as of December 31, 1997, in all material respects, the Company
maintained effective internal controls over financial reporting.
Richard D.Fairbank
Chairman and Chief Executive Officer
Nigel W. Morris
President and Chief Operating Officer
James M.Zinn
Senior Vice President and Chief Financial Officer
PAGE 38