PG&E 2010 Annual Report Download - page 119

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of PG&E Corporation and Pacific Gas and
Electric Company (“Utility”) is responsible for
establishing and maintaining adequate internal control
over financial reporting. PG&E Corporation’s and the
Utility’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, or GAAP. Internal control over financial
reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of PG&E
Corporation and the Utility, (2) provide reasonable
assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance
with GAAP and that receipts and expenditures are being
made only in accordance with authorizations of
management and directors of PG&E Corporation and the
Utility, and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized
acquisition, use, or disposition of 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.
Management assessed the effectiveness of internal
control over financial reporting as of December 31, 2010,
based on the criteria established in Internal Control—
Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Based on its assessment and those criteria, management
has concluded that PG&E Corporation and the Utility
maintained effective internal control over financial
reporting as of December 31, 2010.
Deloitte & Touche LLP, an independent registered
public accounting firm, has audited the Consolidated
Balance Sheets of PG&E Corporation and the Utility, as
of December 31, 2010 and 2009; and PG&E
Corporation’s related consolidated statements of income,
equity, and cash flows and the Utility’s related
consolidated statements of income, shareholders’ equity,
and cash flows for each of the three years in the period
ended December 31, 2010. As stated in their report,
which is included in this annual report, Deloitte &
Touche LLP also has audited PG&E Corporation’s and
the Utility’s internal control over financial reporting as of
December 31, 2010, based on criteria established in
Internal Control —Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission.
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