GE 2007 Annual Report Download - page 42

40 ge 2007 annual report
Management’s Discussion of Financial Responsibility
We believe that great companies are built on a foundation of reliable
fi nancial information and compliance with the spirit and letter of the
law. For General Electric Company, that foundation includes rigorous
management oversight of, and an unyielding dedication to, controller-
ship. The fi nancial disclosures in this report are one product of our
commitment to high quality fi nancial reporting. In addition, we make
every effort to adopt appropriate accounting policies, we devote our
full resources to ensuring that those policies are applied properly and
consistently and we do our best to fairly present our fi nancial results
in a manner that is complete and understandable.
Rigorous Management Oversight
Members of our corporate leadership team review each of our busi-
nesses routinely on matters that range from overall strategy and
fi nancial performance to staffi ng and compliance. Our business lead-
ers monitor fi nancial and operating systems, enabling us to identify
potential opportunities and concerns at an early stage and positioning
us to respond rapidly. Our Board of Directors oversees management’s
business conduct, and our Audit Committee, which consists entirely
of independent directors, oversees our internal control over fi nancial
reporting. We continually examine our governance practices in an
effort to enhance investor trust and improve the Board’s overall effec-
tiveness. The Board and its committees annually conduct a perfor-
mance self-evaluation and recommend improvements. Our Presiding
Director led three meetings of non-management directors this year,
helping us sharpen our full Board meetings to better cover signifi cant
topics. Compensation policies for our executives are aligned with the
long-term interests of GE investors.
Dedication to Controllership
In the last year we identifi ed and disclosed several errors in our previ-
ously reported fi nancial results and several defi ciencies in our internal
control over fi nancial reporting. We and our Audit Committee take
these matters very seriously. We have taken steps to remediate these
defi ciencies and further strengthen our controllership organization,
processes and procedures. We strive to maintain a dynamic system
of internal controls and procedures — including internal control over
fi nancial reporting — designed to ensure reliable fi nancial record-
keeping, transparent fi nancial reporting and disclosure, and protection
of physical and intellectual property. We recruit, develop and retain
a world-class fi nancial team. Our internal audit function, including
members of our Corporate Audit Staff, conducts thousands of fi nancial,
compliance and process improvement audits each year. Our Audit
Committee oversees the scope and evaluates the overall results
of these audits, and members of that Committee regularly attend
GE Capital Services Board of Directors, Corporate Audit Staff and
Controllership Council meetings. Our global integrity policies —
“The Spirit & The Letter” — require compliance with law and policy,
and pertain to such vital issues as upholding fi nancial integrity and
avoiding confl icts of interest. These integrity policies are available in
31 languages, and are provided to all of our employees, holding each
of them accountable for compliance. Our strong compliance culture
reinforces these efforts by requiring employees to raise any compliance
concerns and by prohibiting retribution for doing so. To facilitate open
and candid communication, we have designated ombudspersons
throughout the Company to act as independent resources for reporting
integrity or compliance concerns. We hold our directors, consultants,
agents and independent contractors to the same integrity standards.
Informative Disclosure and Visibility to Investors
We are keenly aware of the importance of full and open presentation
of our fi nancial position and operating results and rely for this purpose
on our disclosure controls and procedures, including our Disclosure
Committee, which comprises senior executives with detailed knowledge
of our businesses and the related needs of our investors. We ask this
committee to review our compliance with accounting and disclosure
requirements, to evaluate the fairness of our fi nancial and non-
fi nancial disclosures, and to report their fi ndings to us. We further
ensure strong disclosure by holding more than 350 analyst and investor
meetings annually.
Conclusion
We welcome the strong oversight of our fi nancial reporting activities
by our independent registered public accounting fi rm, KPMG LLP,
engaged by and reporting directly to the Audit Committee. U.S. legisla-
tion requires management to report on internal control over fi nancial
reporting and for auditors to render an opinion on such controls.
Our report follows and the KPMG LLP report for 2007 appears on the
following page.
We present our fi nancial information proudly, with the expectation
that those who use it will understand our Company, recognize our
commitment to performance with integrity, and share our confi dence
in GE’s future.
Management’s Annual Report on Internal Control
Over Financial Reporting
Management is responsible for establishing and maintaining adequate
internal control over fi nancial reporting for the Company. With our
participation, an evaluation of the effectiveness of our internal control
over fi nancial reporting was conducted as of December 31, 2007,
based on the framework and criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Based on this evaluation, our management has concluded that
our internal control over fi nancial reporting was effective as of
December 31, 2007.
Our independent registered public accounting fi rm has issued an
audit report on our internal control over fi nancial reporting. Their report
appears on the following page.
JEFFREY R. IMMELT KEITH S. SHERIN
Chairman of the Board and Vice Chairman and
Chief Executive Offi cer Chief Financial Offi cer
February 20, 2008