IBM 2015 Annual Report Download - page 76

74 Report of Management
International Business Machines Corporation and Subsidiary Companies
Management Responsibility
for Financial Information
Responsibility for the integrity and objectivity of the financial
information presented in this Annual Report rests with IBM man-
agement. The accompanying financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America, applying certain esti-
mates 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. An important element of the con-
trol environment is an ongoing internal audit program. Our system
also contains self-monitoring mechanisms, and actions are taken
to correct deficiencies as they are identified.
To assure the effective administration of internal controls, we
carefully select and train our employees, develop and disseminate
written policies and procedures, provide appropriate communi-
cation 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.
The Audit Committee of the Board of Directors is composed
solely of independent, non-management directors, and is respon-
sible for recommending to the Board the independent registered
public accounting firm to be retained for the coming year, subject
to stockholder ratification. The Audit Committee meets periodically
and privately with the independent registered public accounting
firm, with the company’s internal auditors, as well as with IBM man-
agement, to review accounting, auditing, internal control structure
and financial reporting matters.
Management’s Report on Internal Control
Over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting of the company.
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 exter-
nal purposes in accordance with accounting principles generally
accepted in the United States of America.
The company’s internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance
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 accounting principles generally accepted in the
United States of America, 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 detection
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, pro-
jections 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.
Management conducted an evaluation of the effectiveness of
internal control over financial reporting based on the criteria estab-
lished in Internal Control—Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management con-
cluded that the company’s internal control over financial reporting
was effective as of December31, 2015.
PricewaterhouseCoopers LLP, an independent registered
public accounting firm, is retained to audit IBM’s Consolidated
Financial Statements and the effectiveness of the internal con-
trol over financial reporting. Its accompanying report is based on
audits conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States).
Virginia M. Rometty
Chairman, President and Chief Executive Officer
February 23, 2016
Martin J. Schroeter
Senior Vice President and Chief Financial Officer
February 23, 2016