IBM 1999 Annual Report Download - page 52

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report of management
International Business Machines Corporation
and Subsidiary Companies
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 account-
ing 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 pro-
vides reasonable assurance that transactions are executed in
accordance with management authorization, and that they are
appropriately recorded, in order to permit preparation of finan-
cial statements in conformity with generally accepted account-
ing 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 dissemi-
nate 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 pro-
grams to assure that they are understood and followed.
PricewaterhouseCoopers LLP, independent accountants, is
retained to examine IBM’s financial statements. Its accompany-
ing 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 proce-
dures and records.
The Audit Committee of the Board of Directors is composed
solely of outside directors, and is responsible for recommend-
ing 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 man-
agement, to review accounting, auditing, internal control structure
and financial reporting matters.
Louis V. Gerstner, Jr. John R. Joyce
Chairman of the Board and Senior Vice President and
Chief Executive Officer Chief Financial Officer
50