Entergy 2005 Annual Report Download - page 58

ENTERGY CORPORATION AND SUBSIDIARIES 2005
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REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries has
prepared and is responsible for the financial statements and related
financial information included in this document. To meet this
responsibility, management establishes and maintains a system of
internal control designed to provide reasonable assurance regarding
the preparation and fair presentation of financial statements in
accordance with generally accepted accounting principles. This
system includes communication through written policies and
procedures, an employee Code of Entegrity, and an organizational
structure that provides for appropriate division of responsibility
and the training of personnel. This system is also tested by a
comprehensive internal audit program.
Entergy management assesses the effectiveness of its internal
control over financial reporting on an annual basis. In making this
assessment, management uses the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control – Integrated Framework.
Management acknowledges, however, that all internal control sys-
tems, no matter how well designed, have inherent limitations and
can provide only reasonable assurance with respect to financial
statement preparation and presentation.
As a supplement to management’s assessment, Entergy’s inde-
pendent auditors conduct an objective assessment of the degree to
which management meets its responsibility for fairness of financial
reporting and issue an attestation report on the adequacy of man-
agement’s assessment. They evaluate Entergy’s internal control over
financial reporting and perform such tests and other procedures as
they deem necessary to reach and express an opinion on the fairness
of the financial statements.
In addition, the Audit Committee of the Board of Directors, com-
posed solely of independent Directors, meets with the independent
auditors, internal auditors, management, and internal accountants
periodically to discuss internal controls, and auditing and financial
reporting matters. The Audit Committee appoints the independent
auditors annually, seeks shareholder ratification of the appointment,
and reviews with the independent auditors the scope and results of
the audit effort. The Committee also meets periodically with the
independent auditors and the chief internal auditor without man-
agement present, providing free access to the Committee.
Based on management’s assessment of internal controls using the
COSO criteria, management believes that Entergy maintained
effective internal control over financial reporting as of December
31, 2005. Management further believes that this assessment,
combined with the policies and procedures noted above provide
reasonable assurance that Entergy’s financial statements are fairly
and accurately presented in accordance with generally accepted
accounting principles.
J. WAYNE LEONARD LEO P. DENAULT
Chief Executive Officer Executive Vice President
and Chief Financial Officer
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Entergy Corporation:
We have audited the accompanying consolidated balance sheets of
Entergy Corporation and Subsidiaries (the Corporation) as of
December 31, 2005 and 2004, and the related consolidated state-
ments of income; of retained earnings, comprehensive income, and
paid-in capital; and of cash flows for each of the three years in the
period ended December 31, 2005. These financial statements are
the responsibility of the Corporation’s management. Our responsi-
bility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Entergy-
Koch, LP, the Corporation’s investment in which is accounted for by
the use of the equity method. The Corporation’s equity in earnings
of unconsolidated equity affiliates for the year ended December 31,
2003 includes $180,110,000 for Entergy Koch, LP, which earnings
were audited by other auditors whose report (which as to 2003
included an explanatory paragraph concerning a change in accounting
for inventory held for trading purposes and energy trading contracts
not qualifying as derivatives) has been furnished to us, and our
opinion for the year ended December 31, 2003, insofar as it relates
to the amount audited by other auditors included for such company,
is based solely on the report of such other auditors.
We conducted our audits 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 includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of other audi-
tors, such consolidated financial statements present fairly, in all
material respects, the financial position of Entergy Corporation and
Subsidiaries as of December 31, 2005 and 2004, and the results of
their operations and their cash flows 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.
As discussed in Note 8 to the consolidated financial statements, in
2003 Entergy Corporation adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for
Asset Retirement Obligations.
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effective-
ness of the Corporation’s 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 and our report
dated March 9, 2006 expressed an unqualified opinion on management’s
assessment of the effectiveness of the Corporation’s internal control
over financial reporting and an unqualified opinion on the effectiveness
of the Corporation’s internal control over financial reporting.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 9, 2006