ADP 2005 Annual Report Download - page 49

Board of Directors and Stockholders of
Automatic Data Processing, Inc.
Roseland, New Jersey
We have audited management’s assessment, included in the accom-
panying Management Report on Internal Control Over Financial
Reporting, that Automatic Data Processing, Inc. and subsidiaries (the
“Company” or “ADP”) maintained effective internal control over
financial reporting as of June 30, 2005, based on criteria established
in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. As described
in Management’s Report on Internal Control Over Financial
Reporting, management excluded from their assessment the internal
control over financial reporting of the business of ADP Clearing and
Outsourcing Services, Inc., which business was acquired on
November 1, 2004 and whose financial statements reflect total assets
and revenues constituting 5 and 1 percent, respectively, of the related
consolidated financial statement amounts as of and for the year
ended June 30, 2005. Accordingly, our audit did not include the inter-
nal control over financial reporting at ADP Clearing and Outsourcing
Services, Inc. The Company’s management is responsible for main-
taining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management’s
assessment and an opinion on the effectiveness of the Company’s
internal control over financial reporting based on our audit.
We conducted our audit 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 rea-
sonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over
financial reporting, evaluating management’s assessment, testing
and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered
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 by, or under the supervision of, the company’s principal
executive and principal financial officers, or persons performing
similar functions, and effected by the company’s board of directors,
management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with gen-
erally accepted accounting principles. A company’s 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 the company; (2) provide reasonable assurance that trans-
actions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting princi-
ples, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the company’s assets that could have a mate-
rial effect on the financial statements.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper manage-
ment override of controls, material misstatements due to error or
fraud may not be prevented or detected on a timely basis. Also, pro-
jections of any evaluation of the effectiveness of the internal control
over financial reporting to future periods are subject to the risk that
the controls may become inadequate because of changes in condi-
tions, or that the degree of compliance with the policies or proce-
dures may deteriorate.
In our opinion, management’s assessment that the Company main-
tained effective internal control over financial reporting as of June
30, 2005, is fairly stated, in all material respects, based on the crite-
ria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting
as of June 30, 2005, based on the criteria established in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated financial statements as of and for the year ended
June 30, 2005 of the Company, and our report dated August 17, 2005
expressed an unqualified opinion on those consolidated financial
statements.
New York, New York
August 17, 2005
47
AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES
Report of Independent
Registered Public Accounting Firm