American Home Shield 2005 Annual Report Download - page 31

P. 2 9 SERVICEMASTER 2005 ANNUAL REPORT
Management’s Report on Internal Control over
Financial Reporting
The management of The ServiceMaster Company (“The
Company”) is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company’s
internal control over financial reporting is designed to provide
reasonable assurance to the Company’s management and
board of directors regarding the preparation and fair presenta-
tion of published financial statements.
All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31,
2005. In making this assessment, it used the criteria set forth
by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control – Integrated
Framework. Based on our assessment we believe that, as of
December 31, 2005, the Company’s internal control over
financial reporting is effective based on those criteria.
Deloitte & Touche LLP, the Company’s auditors, have issued an
attestation report on our management’s assessment of the
effectiveness of our internal control over financial reporting as
of December 31, 2005. This attestation report is included below.
Report of Independent Registered Public
Accounting Firm
To the Board of Directors and Shareholders of
The ServiceMaster Company
We have audited management’s assessment, included in the
accompanying Management’s Report on Internal Control over
Financial Reporting, that The ServiceMaster Company and
subsidiaries (the “Company”) maintained effective internal
control over financial reporting as of December 31, 2005,
based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. 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 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 reasonable 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 manage-
ment’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 generally 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 principles, and that receipts and expenditures of
the company are being made only in accordance with authori-
zations 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 material effect on the
financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstate-
ments due to error or fraud may not be prevented or detected
on a timely basis. Also, projections 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 conditions, or
that the degree of compliance with the policies or procedures
may deteriorate.
In our opinion, management’s assessment that the Company
maintained effective internal control over financial reporting as
of December 31, 2005, is fairly stated, in all material respects,
based on the criteria 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 December 31,
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 December 31, 2005 of the Company and our report
dated February 27, 2006 expressed an unqualified opinion on
those financial statements.
Chicago, Illinois
February 27, 2006