Alcoa 2006 Annual Report Download - page 44

Management’s Reports
to Alcoa Shareholders
Management’s Report on
Financial Statements and Practices
The accompanying consolidated financial statements of
Alcoa Inc. and its subsidiaries (the “Company”) were pre-
pared by management, which is responsible for their
integrity and objectivity. The statements were prepared in
accordance with generally accepted accounting principles
and include amounts that are based on management’s best
judgments and estimates. The other financial information
included in the annual report is consistent with that in the
financial statements.
Management also recognizes its responsibility for con-
ducting 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.
Management’s Report on
Internal Control over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company. In order to evaluate the effectiveness of internal
control over financial reporting, as required by Section 404
of the Sarbanes-Oxley Act, management has conducted an
assessment, including testing, using the criteria in Internal
Control—Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO). The Company’s system of internal control over
financial reporting is designed to provide reasonable assur-
ance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
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 prepa-
ration of financial statements 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 directors of the Com-
pany; 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, 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.
Based on the assessment, management has concluded that
the Company maintained effective internal control over
financial reporting as of December 31, 2006, based on cri-
teria in Internal Control—Integrated Framework issued by
the COSO. Management’s assessment of the effectiveness of
the Company’s internal control over financial reporting as
of December 31, 2006, has been audited by Pricewaterhou-
seCoopers LLP, an independent registered public accounting
firm, as stated in their report which is included herein.
Management’s Certifications
The certifications of the Company’s Chief Executive Officer
and Chief Financial Officer required by the Sarbanes-Oxley
Act have been included as Exhibits 31 and 32 in the
Company’s Form 10-K. In addition, in 2006, the Compa-
ny’s Chief Executive Officer provided to the New York
Stock Exchange the annual CEO certification regarding the
Company’s compliance with the New York Stock
Exchange’s corporate governance listing standards.
Alain J. P. Belda
Chairman and
Chief Executive Officer
Charles D. McLane, Jr.
Vice President and
Chief Financial Officer
42