IBM 2003 Annual Report Download - page 44

INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
42
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 judg-
ments 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 con-
formity 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 a ssure the effective administration of internal controls,
we carefully select and train our employees, develop and dis-
seminate written policies and procedures, provide appropriate
communication channels, and foster an environment con-
ducive 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.
PricewaterhouseCoopers LLP, independent auditors, is
retained to examine IBM’s financial statements. Its accom-
panying 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 com-
posed solely of independent, non-management directors,
and is responsible for recommending to the Board the inde-
pendent auditing firm to be retained for the coming year,
subject to stockholder ratification. The Audit Committee
meets periodically and privately with the independent audi-
tors, with the company’s internal auditors, as well as with
IBM management, to review accounting, auditing, internal
control structure and financial reporting matters.
SAMUEL J. PALMISANO
Chairman of the Board,
President and Chief Executive Officer
Report of Management
Report of Independent Auditors
To the Stockholders and Board of Directors of
International Business Machines Corporation:
In our opinion, based on our audits and the report of other
auditors, the accompanying consolidated financial state-
ments appearing on pages 74 through 121 present fairly, in all
material respects, the financial position of International
Business Machines Corporation and subsidiary companies at
December 31, 2003 and 2002, and the results of their opera-
tions and their cash flows for each of the three years in the
period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United
States of America. These financial statements are the
responsibility of the company’s management; our responsi-
bility is to express an opinion on these financial statements
based on our audits. We did not audit the financial state-
ments of the company’s Business Consulting Services
Reporting Unit (which includes the consulting practice
acquired from us as discussed in note C) for the year ended
December 31, 2003 and the three months ended December
31, 2002, which statements reflect total revenues of 14.5 per-
cent and 4.3 percent of the related consolidated totals in the
periods ended December 31, 2003 and 2002, respectively.
Those statements were audited by other auditors whose
report thereon has been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included
for the company’s Business Consulting Services Reporting
Unit, is based solely on the report of the other auditors. We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits and the report of
other auditors provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
New York, New York
January 15, 2004
JOHN R. JOYCE
Senior Vice President and
Chief Financial Officer