SunTrust 2004 Annual Report Download - page 69

SUNTRUST 2004 ANNUAL REPORT 67
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF SUNTRUST BANKS,INC.:
We have completed an integrated audit of SunTrust Banks, Inc.’s
2004 consolidated financial statements and of its internal control
over financial reporting as of December 31, 2004 and audits of its
2003 and 2002 consolidated financial statements in accordance
with the standards of the Public Company Accounting Oversight
Board (United States). Our opinions, based on our audits, are pre-
sented below.
CONSOLIDATED FINANCIAL STATEMENTS
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of income, shareholders’
equity and cash flows present fairly, in all material respects, the
financial position of SunTrust Banks, Inc. and its subsidiaries (the
“Company”) at December 31, 2004 and 2003, and the results of
their operations and their cash flows for each of the three years in
the period ended December 31, 2004 in conformity with account-
ing principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.We conducted our audits
of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States).Those stan-
dards require that we plan and perform the audit to obtain reason-
able assurance about whether the financial statements are free of
material misstatement. An audit of financial statements 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 provide a reasonable basis for our opinion.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Also, we have audited management’s assessment, included in
Management’s Report on Internal Control Over Financial Reporting
appearing on pages 64 and 65 of the 2004 Annual Report to
Shareholders, that SunTrust Banks, Inc. did not maintain effective
internal control over financial reporting as of December 31, 2004,
because of the effect of a material weakness in the Company’s valu-
ation of the allowance for loan losses and related provision, based
on criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”).The Company’s management is
responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express
opinions on management’s assessment and on the effectiveness of
the Company’s internal control over financial reporting based on
our audit.
We conducted our audit of internal control over financial reporting
in accordance with the standards of the Public Company Accounting
Oversight Board (United States).Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was
maintained in all material respects.An audit of internal control over
financial reporting includes obtaining an understanding of internal
control over financial reporting, evaluating management’s assess-
ment, testing and evaluating the design and operating effectiveness
of internal control, and performing such other procedures as we
consider necessary in the circumstances.We believe that our audit
provides a reasonable basis for our opinions.
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 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 state-
ments 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 direc-
tors of the company; and (iii) provide reasonable assurance regard-
ing 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, projec-
tions 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.
A material weakness is a control deficiency, or combination of con-
trol deficiencies, that results in more than a remote likelihood that a
material misstatement of the annual or interim financial state-
ments will not be prevented or detected.The following material
weakness has been identified and included in management’s assess-
ment. As of December 31, 2004, the Company did not maintain
effective internal control over the valuation of the allowance for
loan losses and the related provision. This control deficiency
resulted in the restatement of the Company’s consolidated financial
statements for the first and second quarters of 2004.Additionally,
this control deficiency results in a more than remote likelihood that
a material misstatement to the annual or interim consolidated
financial statement will not be prevented or detected.Accordingly,
management has determined that this condition constitutes a
material weakness. This material weakness was considered in
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM