IBM 1997 Annual Report Download - page 40

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Responsibility for the integrity and objectivity of the financial information presented in this Annual Report rests with
IBM management. The accompanying financial statements have been prepared in conformity with generally accepted
accounting principles, applying certain estimates and judgments as required.
IBM maintains an effective internal control structure. It consists, in part, of organizational arrangements with clearly
defined lines of responsibility and delegation of authority, and comprehensive systems and control procedures. We believe
this structure provides reasonable assurance that transactions are executed in accordance with management
authorization, and that they are appropriately recorded, in order to permit preparation of financial statements in
conformity with generally accepted accounting principles and to adequately safeguard, verify and maintain accountability
of assets. An important element of the control environment is an ongoing internal audit program.
To assure the effective administration of internal control, we carefully select and train our employees, develop and
disseminate written policies and procedures, provide appropriate communication channels, and foster an environment
conducive to the effective functioning of controls. We believe that it is essential for the company to conduct its business
affairs in accordance with the highest ethical standards, as set forth in the IBM Business Conduct Guidelines. These
guidelines, translated into numerous languages, are distributed to employees throughout the world, and reemphasized
through internal programs to assure that they are understood and followed.
Price Waterhouse LLP, independent accountants, is retained to examine IBM’s financial statements. Its accompanying
report is based on an examination conducted in accordance with generally accepted auditing standards, including a
review of the internal control structure and tests of accounting procedures and records.
The Audit Committee of the Board of Directors is composed solely of outside directors, and is responsible for
recommending to the Board the independent accounting firm to be retained for the coming year, subject to stockholder
approval. The Audit Committee meets periodically and privately with the independent accountants, with our internal
auditors, as well as with IBM management, to review accounting, auditing, internal control structure and
financial reporting matters.
Louis V. Gerstner, Jr. Lawrence R. Ricciardi
Chairman of the Board Senior Vice President, General Counsel
and Chief Executive Officer and Chief Financial Officer
report of management
International Business Machines Corporation
and Subsidiary Companies
38