Capital One 1998 Annual Report Download - page 38

36Capital One Financial Corporation
The Management of Capital One Financial Corporation is responsi-
ble for the preparation, integrity and fair presentation of the finan-
cial statements and footnotes contained in this Annual Report. The
Consolidated Financial Statements have been prepared in accor-
dance with generally accepted accounting principles and are free of
material misstatement. The Company also prepared other informa-
tion included in this Annual Report and is responsible for its accu-
racy and consistency with the financial statements. In situations
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
quality 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 reli-
ability of financial statements and safeguarding of assets. Further-
more, because of changes in conditions, internal control
effectiveness may vary over time.
The Company assessed its internal controls over financial report-
ing as of December 31, 1998, in relation to the criteria described
in the “Internal Control-Integrated Framework” issued by the Com-
mittee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, the Company believes that as of Decem-
ber 31, 1998, 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
David M. Willey
Senior Vice President, Finance and Accounting
Management’s Report on Consolidated Financial Statements and Internal Controls
Over Financial Reporting