Chevron 2005 Annual Report Download - page 54

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Chevron Corporation:
We have completed integrated audits of Chevron Corporation’s 2005 and 2004 consolidated fi nancial statements and of its internal
control over fi nancial reporting as of December 31, 2005, and an audit of its 2003 consolidated fi nancial statements in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented
below.
CONSOLIDATED FINANCIAL STATEMENTS
In our opinion, the accompanying consolidated balance sheets and the related statements of income, comprehensive income, stock-
holders’ equity and cash fl ows present fairly, in all material respects, the fi nancial position of Chevron Corporation and its subsidiaries
at December 31, 2005 and 2004, and the results of their operations and their cash fl ows for each of the three years in the period ended
December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These fi nancial state-
ments are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free of material misstatement. An audit of fi nancial statements includes examining, on a test basis,
evidence supporting the amounts and disclosures in the fi nancial statements, assessing the accounting principles used and signifi cant
estimates made by management, and evaluating the overall fi nancial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 24 to the Consolidated Financial Statements, beginning on page 83, the Company changed its method of
accounting for asset retirement obligations as of January 1, 2003.
INTERNAL CONTROL OVER FINANCIAL REPORTING
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 fi nancial 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 (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 fi nancial reporting as of December 31, 2005,
based on criteria established in Internal Control – Integrated Framework issued by the COSO. The Company’s management is
responsible for maintaining effective internal control over fi nancial reporting and for its assessment of the effectiveness of internal
control over fi nancial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness
of the Company’s internal control over fi nancial reporting based on our audit. We conducted our audit of internal control over
fi nancial 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
fi nancial reporting was maintained in all material respects. An audit of internal control over fi nancial reporting includes obtaining
an understanding of internal control over fi nancial reporting, evaluating management’s assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinions.
A company’s internal control over fi nancial reporting is a process designed to provide reasonable assurance regarding the
reliability of fi nancial reporting and the preparation of fi nancial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over fi nancial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly refl ect the transactions and dispositions
of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
fi nancial 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 unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the fi nancial statements.
Because of its inherent limitations, internal control over fi nancial 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.
San Francisco, California
February 27, 2006
52 CHEVRON CORPORATION 2005 ANNUAL REPORT