Avid 2004 Annual Report Download - page 51

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37
Management’s Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under
the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal
executive and principal financial officers 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 and includes those policies
and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the company;
• Provide reasonable assurance that transactions 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 authorizations of management and directors of the Company;
and
• 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.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting
as of December 31, 2004. In making this assessment, the Company’s management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Management’s assessment of internal control over financial reporting excluded Midiman, Inc. (doing business as M-Audio)
and its subsidiaries because M-Audio was acquired by the Company in a purchase business combination during 2004. M-
Audio and its subsidiaries represented 33% and 4% of the Company’s total assets and total revenues, respectively as of and
for the year ended December 31, 2004. Excluding identifiable intangible assets and goodwill recorded in the business
combination, M-Audio and its subsidiaries represented 5% of the Company’s total assets as of December 31, 2004.
Based on our assessment, management has concluded that, as of December 31, 2004, the Company’s internal
control over financial reporting is effective based on the criteria set forth by the COSO.
Our management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report which appears on page 38 of this Annual Report on Form 10-K.