Digital River 2006 Annual Report Download - page 65

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A company’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.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial reporting
did not include the internal controls of MindVision, Inc., which is included in the December 31, 2006,
consolidated financial statements of Digital River, Inc. and constituted less than three percent of total assets at
December 31, 2006, and approximately one percent of revenue and net income for the year then ended. Our
audit of internal control over financial reporting of Digital River, Inc. also did not include an evaluation of the
internal control over financial reporting of MindVision, Inc.
In our opinion, management’s assessment that Digital River, Inc. 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, Digital River, Inc. 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 consolidated balance sheets of Digital River, Inc. and subsidiaries as of
December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders’ equity and
cash flows for each of the three years in the period ended December 31, 2006, and our report dated March 1,
2007, expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
March 1, 2007
ITEM 9B. OTHER INFORMATION
None.
61