Alcoa 1998 Annual Report Download - page 40

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Management’s Report to
Alcoa Shareholders
The accompanying financial statements of
Alcoa and consolidated subsidiaries were
prepared by management, which is respon-
sible for their integrity and objectivity.
The statements were prepared in accor-
dance with generally accepted accounting
principles and include amounts that are
based on management’s best judgments and
estimates. The other financial information
included in this annual report is consistent
with that in the financial statements.
The company maintains a system of
internal controls, including accounting
controls, and a strong program of internal
auditing. The system of controls provides
for appropriate procedures that are consis-
tent with high standards of accounting
and administration. The company believes
that its system of internal controls provides
reasonable assurance that assets are safe-
guarded against losses from unauthorized
use or disposition and that financial records
are reliable for use in preparing financial
statements.
Management also recognizes its
responsibility for conducting the company’s
affairs according to the highest standards
of personal and corporate conduct. This
responsibility is characterized and reflected
in key policy statements issued from time to
time regarding, among other things, conduct
of its business activities within the laws
of the host countries in which the company
operates and potentially conflicting outside
business interests of its employees. The
company maintains a systematic program
to assess compliance with these policies.
Paul H. O’Neill
Chairman of the Board and
Chief Executive Officer
Richard B. Kelson
Executive Vice President and
Chief Financial Officer
Audit Committee Report
The Audit Committee of the Board of
Directors, which is composed of five inde-
pendent directors, met seven times in 1998.
The Audit Committee oversees Alcoa’s
financial reporting process on behalf
of the Board of Directors. In fulfilling
its responsibility, the committee recom-
mended to the Board the reappointment
of PricewaterhouseCoopers LLP as the
company’s independent public accountants.
The Audit Committee reviewed with the
Vice President–Audit and the independent
accountants the overall scope and specific
plans for their respective audits. The
committee reviewed with management
Alcoa’s annual and quarterly reporting
process, and the adequacy of the company’s
internal controls. Without management
present, the committee met separately
with the Vice President–Audit and the
independent accountants to review the
results of their examinations, their evalua-
tions of the company’s internal controls,
and the overall quality of Alcoa’s financial
reporting.
Henry B. Schacht
Chairman, Audit Committee
Independent Accountant’s
Report
To the Shareholders
and Board of Directors
Alcoa Inc. (Alcoa)
In our opinion, the accompanying con-
solidated balance sheet and the related
consolidated statements of income and
shareholders’ equity and of cash flows
present fairly, in all material respects, the
financial position of Alcoa at December 31,
1998 and 1997, and the results of its opera-
tionsanditscashflowsforeachofthethree
years in the period ended December 31,
1998, in conformity with generally accepted
accounting principles. These financial
statements are the responsibility of Alcoa’s
management; our responsibility is to
express an opinion on these financial state-
ments based on our audits. We conducted
our audits of these statements in accordance
with generally accepted auditing standards
which require that we plan and perform
the audits to obtain reasonable assurance
about whether the financial statements are
free of material misstatement. An audit
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 the opinion
expressed above.
600 Grant St., Pittsburgh, Pa.
January 8, 1999