Cogeco 2006 Annual Report Download - page 17

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Management’s Discussion and Analysis COGECO CABLE INC. 2006 15
CONTROLS AND PROCEDURES
The application of Bill 198 and its regulations represents an exercise in continuous improvement, which is leading the
Corporation to formalize processes and control measures that are already in place and to introduce new ones. Cogeco Cable
has chosen to make this a strategic endeavour, which will result in operational improvements and better management.
The President and Chief Executive Offi cer and the Vice President, Finance and Chief Financial Offi cer, together with
management, have evaluated the effectiveness of the Corporation’s disclosure controls and procedures and the design
of internal controls over fi nancial reporting as of August 31, 2006. They have concluded that the Corporation’s disclosure
controls and procedures were adequate and effective to ensure that material information relating to the Corporation is
complete and reliable. However, certain material weaknesses were identifi ed in the design of internal controls over fi nancial
reporting at that date.
On August 1, 2006, Cogeco Cable purchased Cabovisão in Portugal. Due to the short period of time between the purchase
date and the certifi cation date of August 31, 2006, management was unable to complete its review of internal controls
over fi nancial reporting for the newly acquired Portuguese subsidiary. At year end, related disclosure control risks were
mitigated as all assets and liabilities acquired related to the new subsidiary were evaluated and recorded in the consolidated
fi nancial statements as part of the purchase price allocation and the one month results of operations of Cabovisão were
also included in the consolidated results.
The Corporation has implemented an awareness program relating to its Corporate Code of Conduct. As at August 31, 2006,
all employees of the Corporation have received and read the Corporate Code of Conduct except for employees of the newly
acquired subsidiary, Cabovisão, who will complete the program by March 2007.
In recent years increased penetration of Digital Television, HSI and Digital Telephony services and the launch of different
types of home terminal devices has heightened the complexity of tracking such customer premise equipment. Existing
information systems at Cogeco Cable record such equipment located in its warehouse as fi xed assets rather than as
inventory, and the home terminal devices are subject to amortization once received. Management is currently considering
a program to monitor and track its home terminal devices from their initial purchase to their return by customers. The
implementation of such a system could result in an adjustment to the carrying value of these assets.
Material weaknesses related to access controls over various databases were observed. The Corporation will begin monitoring
system access and reviewing the adequacy of segregation of duties as part of the design of the Corporation’s processes.
Remediation of these processes will gradually be designed and implemented.
UNCERTAINTIES AND MAIN RISK FACTORS
This section outlines general as well as more specifi c risks faced by Cogeco Cable and its subsidiaries that could signifi cantly
affect the fi nancial condition, operating results or business of the Corporation. It does not purport to cover all contingencies,
or to describe all possible factors that might have an infl uence on the Corporation or its activities at any point in time.
Furthermore, the risks and uncertainties outlined in this section may or may not materialize in the end, may evolve
differently than expected, or may have different consequences than those that are being currently anticipated.
Cogeco Cable applies an on-going risk management process that includes a quarterly assessment of risks for the
Corporation and its subsidiaries, under the oversight of the Audit Committee. As part of this process, the Corporation
endeavours to identify risks that are liable to have a major impact on the Corporation’s fi nancial situation, revenue or
activities, and to mitigate such risks proactively as may be reasonable and appropriate under the circumstances. This section
refl ects current views on uncertainties and main risk factors considered as a part of this process.