Cogeco 2007 Annual Report Download - page 17

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Management’s Discussion and Analysis COGECO CABLE INC. 2007 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 and 2007. 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 these dates.
On August 1, 2006, Cogeco Cable purchased Cabovisão in Portugal. During the fi scal year ending August 31, 2007,
management has undergone a project to review the design of internal controls over fi nancial reporting of signifi cant processes.
At year end, internal controls over fi nancial closing and reporting were designed. All other processes are still under review
and management estimates that some controls over access to databases and improper segregation of duties, as well as some
automated controls, will be implemented during next fi scal year.
The Corporation has implemented an awareness program relating to its Corporate Code of Conduct. As at August 31, 2007,
all employees of the Corporation have received and read the Corporate Code of Conduct including employees of the newly
acquired subsidiary, Cabovisão.
In recent years increased penetration of Digital Television, HSI and 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 has decided to implement, within the next
year, new processes and software 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 in the carrying value of these assets.
During the fi scal year ending August 31, 2007, management has documented evidence of existing controls, designed and
implemented new and enhanced automated and manual internal controls over fi nancial reporting for many processes. There
are still some material weaknesses related to access controls over various databases and automated controls. Therefore, some
modifi cations to the segregation of duties are currently being remediated.
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 presently 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 in the circumstances. This section refl ects management’s
current views on uncertainties and main risk factors.