Dominion Power 2005 Annual Report Download - page 56

54 Dominion 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Dominion Resources, Inc.
We have audited management’s assessment, included in para-
graphs 5-8 of the accompanying Management’s Annual Report on
Internal Control over Financial Reporting, that Dominion Resources,
Inc. maintained effective internal control over financial reporting as
of December 31, 2005, based on criteria established in Internal
Control
— Integrated Framework issued by the Committee of Spon-
soring Organizations of the Treadway Commission. As described in
Management’s Annual Report on Internal Control over Financial
Reporting, management excluded from their assessment the inter-
nal control over financial reporting at certain special purpose enti-
ties consolidated under Financial Accounting Standards Board
Interpretation No. 46 (revised December 2003), Consolidation of
Variable Interest Entities. The Company’s Consolidated Balance
Sheet, as of December 31, 2005, reflects $598 million of net
property, plant and equipment and deferred charges and $688 mil-
lion of related debt attributable to these special purpose entities.
Accordingly, our audit did not include the internal control over finan-
cial reporting at those special purpose entities. The Company’s
management is responsible for maintaining effective internal con-
trol over financial reporting and for its assessment of the effective-
ness of internal control over financial reporting. Our responsibility is
to express an opinion on management’s assessment and an opin-
ion on the effectiveness of 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 rea-
sonable 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, evaluating management’s assessment, testing
and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered
necessary 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 by, or under the supervision of, the company’s principal
executive and principal financial officers, or persons performing sim-
ilar functions, and effected by the company’s board of directors,
management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with gen-
erally 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 reason-
able assurance regarding prevention or timely detection of unautho-
rized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis.
Also, projections of any evaluation of the effectiveness of the inter-
nal control over financial reporting to future periods are subject to
the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, management’s assessment that the Company
maintained effective internal control over financial reporting as of
December 31, 2005, is fairly stated, in all material respects, based
on the criteria established in Internal Control
— Integrated Frame-
work issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Also in our opinion, the Company main-
tained, in all material respects, effective internal control over
financial reporting as of December 31, 2005, based on the
criteria established in Internal Control
— Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
Richmond, Virginia
March 2, 2006
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated financial statements as of and for the year ended
December 31, 2005 of the Company and our reports dated March
2, 2006, expressed an unqualified opinion on those financial state-
ments and included an explanatory paragraph referring to a change
in accounting principle.