Cardinal Health 2013 Annual Report Download - page 53

Cardinal Health, Inc. and Subsidiaries
Report of Management on Internal Control Over Financial Reporting
51
Management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) under
the Exchange Act. Our internal control system is designed 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. Because of its
inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also controls deemed effective now may
become inadequate in the future because of changes in conditions, or
because compliance with the policies or procedures has deteriorated or
been circumvented.
Management assessed the effectiveness of our internal control over
financial reporting as of June 30, 2013. In making this assessment,
management used the criteria established in the Internal Control-
Integrated Framework (1992) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the “COSO criteria”). Based
on management’s assessment and the COSO criteria, management
believes that our internal control over financial reporting was effective as
of June 30, 2013.
Our independent registered public accounting firm, Ernst & Young LLP,
has issued a report on our internal control over financial reporting. Ernst &
Young LLP’s report appears below and expresses an unqualified opinion
on the effectiveness of our internal control over financial reporting.
On March 18, 2013, we completed the acquisition of AssuraMed. As
permitted by guidelines established by the SEC, management excluded
AssuraMed from the scope of its assessment of the effectiveness of
internal control over financial reporting as of June 30, 2013. AssuraMed
constituted 9 percent and 35 percent of our total and net assets,
respectively, as of June 30, 2013 and less than 1 percent of both our
revenue and operating earnings for the fiscal year then ended.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Cardinal Health, Inc.
We have audited Cardinal Health, Inc. and subsidiaries' internal control
over financial reporting as of June 30, 2013, based on criteria established
in Internal Control-Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (the COSO
criteria). Cardinal Health, Inc. and subsidiaries' management is
responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control
over financial reporting included in the accompanying “Management's
Report on Internal Control Over Financial Reporting.” Our responsibility
is to express an opinion on 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, assessing the
risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for
our opinion.
A company's internal control over financial reporting is a process designed
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 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 (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 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.
As indicated in the accompanying “Management's Report on Internal
Control Over Financial Reporting,” management's assessment of and
conclusion on the effectiveness of internal control over financial reporting
did not include the internal control of AssuraMed, Inc., which is included
in the 2013 consolidated financial statements of Cardinal Health, Inc. and
subsidiaries and constituted 9 percent and 35 percent of total and net
assets, respectively, as of June 30, 2013 and less than 1 percent of both
revenue and operating earnings for the year then ended. Our audit of
internal control over financial reporting of Cardinal Health, Inc. and
subsidiaries also did not include an evaluation of the internal control over
financial reporting of AssuraMed, Inc.
In our opinion, Cardinal Health, Inc. and subsidiaries maintained, in all
material respects, effective internal control over financial reporting as of
June 30, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated
balance sheets of Cardinal Health, Inc. and subsidiaries as of June 30,
2013 and 2012 and the related consolidated statements of earnings,
comprehensive income, shareholders' equity and cash flows for each of
the three years in the period ended June 30, 2013 of Cardinal Health, Inc.
and subsidiaries and our report dated August 20, 2013 expressed an
unqualified opinion thereon.
Columbus, Ohio
August 20, 2013