Chevron 2004 Annual Report Download - page 50

48 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT

To฀the฀Stockholders฀and฀the฀Board฀of฀Directors฀of฀ChevronTexaco฀Corporation:
We฀have฀completed฀an฀integrated฀audit฀of฀ChevronTexaco฀Corporation’s฀2004฀consolidated฀financial฀statements฀and฀of฀its฀internal฀control฀
over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀and฀audits฀of฀its฀2003฀and฀2002฀consolidated฀financial฀statements฀in฀accordance฀with฀the฀
standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States).฀Our฀opinions,฀based฀on฀our฀audits,฀are฀presented฀below.

In฀our฀opinion,฀the฀accompanying฀consolidated฀balance฀sheets฀and฀the฀related฀consolidated฀statements฀of฀income,฀comprehensive฀income,฀
stockholders’฀equity฀and฀cash฀flows฀present฀fairly,฀in฀all฀material฀respects,฀the฀financial฀position฀of฀ChevronTexaco฀Corporation฀and฀its฀
subsidiaries฀at฀December฀31,฀2004฀and฀2003,฀and฀the฀results฀of฀their฀operations฀and฀their฀cash฀flows฀for฀each฀of฀the฀three฀years฀in฀the฀period฀
ended฀December฀31,฀2004,฀in฀conformity฀with฀accounting฀principles฀generally฀accepted฀in฀the฀United฀States฀of฀America.฀These฀financial฀
statements฀are฀the฀responsibility฀of฀the฀Company’s฀management.฀Our฀responsibility฀is฀to฀express฀an฀opinion฀on฀these฀financial฀statements฀
based฀on฀our฀audits.฀We฀conducted฀our฀audits฀of฀these฀statements฀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฀
the฀financial฀statements฀are฀free฀of฀material฀misstatement.฀An฀audit฀of฀financial฀statements฀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฀our฀opinion.

Also,฀in฀our฀opinion,฀management’s฀assessment,฀included฀in฀the฀accompanying฀Management’s฀Report฀on฀Internal฀Control฀Over฀Financial฀
Reporting,฀that฀the฀Company฀maintained฀effective฀internal฀control฀over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀based฀on฀criteria฀
established฀in฀Internal฀Control฀–฀Integrated฀Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commis-
sion฀(COSO),฀is฀fairly฀stated,฀in฀all฀material฀respects,฀based฀on฀those฀criteria.฀Furthermore,฀in฀our฀opinion,฀the฀Company฀maintained,฀in฀
all฀material฀respects,฀effective฀internal฀control฀over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀based฀on฀criteria฀established฀in฀Internal฀
Control฀–฀Integrated฀Framework฀issued฀by฀the฀COSO.฀The฀Company’s฀management฀is฀responsible฀for฀maintaining฀effective฀internal฀con-
trol฀over฀financial฀reporting฀and฀for฀its฀assessment฀of฀the฀effectiveness฀of฀internal฀control฀over฀financial฀reporting.฀Our฀responsibility฀is฀to฀
express฀opinions฀on฀management’s฀assessment฀and฀on฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀based฀
on฀our฀audit.฀We฀conducted฀our฀audit฀of฀internal฀control฀over฀financial฀reporting฀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.฀An฀audit฀of฀internal฀control฀over฀
financial฀reporting฀includes฀obtaining฀an฀understanding฀of฀internal฀control฀over฀financial฀reporting,฀evaluating฀management’s฀assessment,฀
testing฀and฀evaluating฀the฀design฀and฀operating฀effectiveness฀of฀internal฀control,฀and฀performing฀such฀other฀procedures฀as฀we฀consider฀nec-
essary฀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฀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฀(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฀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฀(iii)฀provide฀reasonable฀assurance฀regarding฀prevention฀or฀timely฀detection฀of฀unauthor-
ized฀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,฀projec-
tions฀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฀discussed฀in฀Note฀25฀on฀page฀77฀to฀the฀financial฀statements,฀the฀Company฀changed฀its฀method฀of฀accounting฀for฀asset฀retirement฀obliga-
tions฀as฀of฀January฀1,฀2003.
San฀Francisco,฀California
March฀2,฀2005