IBM 2007 Annual Report Download - page 59

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57
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
INTERNATIONAL BUSINESS MACHINES CORPORATION:
In our opinion, the accompanying Consolidated Financial Statements
appearing on pages 58 through 119 present fairly, in all material
respects, the financial position of International Business Machines
Corporation and its subsidiaries at December 31, 2007 and 2006 and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2007 in conformity
with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all mate-
rial respects, effective internal control over financial reporting as of
December 31, 2007, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organ-
izations of the Treadway Commission (COSO). The Company’s
management is responsible for these financial statements, for main-
taining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting appearing on page 56.
Our responsibility is to express opinions on these financial state-
ments and on the Company’s internal control over financial reporting
based on our integrated audits. We conducted our audits in accor-
dance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement
and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial state-
ments included 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 manage-
ment, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assess-
ing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
As discussed in note B to the financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards
No. 158, “Employers Accounting for Defined Benefit Pension and
Other Post-employment Plans,” as of December 31, 2006.
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 (i) pertain to the mainte-
nance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(ii) 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 (iii)
provide reasonable assurance regarding prevention or timely detec-
tion 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.
PricewaterhouseCoopers LLP
New York, New York
February 26, 2008
Report of Independent Registered Public Accounting Firm
International Business Machines Corporation and Subsidiary Companies