Eversource 2003 Annual Report Download - page 46

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Company Report
Management is responsible for the preparation, integrity, and fair
presentation of the accompanying consolidated financial statements of
Northeast Utilities and subsidiaries and other sections of this annual
report. These financial statements, which were audited by Deloitte &
Touche LLP, have been prepared in conformity with accounting principles
generally accepted in the United States of America using estimates and
judgments, where required, and giving consideration to materiality.
The company has endeavored to establish a control environment that
encourages the maintenance of high standards of conduct in all of its
business activities. Management is responsible for maintaining a system
of internal control over financial reporting that is designed to provide
reasonable assurance, at an appropriate cost-benefit relationship, to the
company’s management and Board of Trustees regarding the preparation
of reliable, published financial statements. The system is supported by an
organization of trained management personnel, policies and procedures,
and a comprehensive program of internal audits. Through established
programs, the company regularly communicates to its management
employees their internal control responsibilities and obtains information
regarding compliance with policies prohibiting conflicts of interest and
policies segregating information between regulated and unregulated
subsidiary companies. The company has standards of business conduct
for all employees, as well as a code of ethics for senior financial officers.
The Audit Committee of the Board of Trustees is composed entirely of
independent trustees and includes two members that the Board of
Trustees considers “audit committee financial experts.” The Audit
Committee meets regularly with management, the internal auditors and
the independent auditors to review the activities of each and to discuss
audit matters, financial reporting matters, and the system of internal
controls over financial reporting. The Audit Committee also meets
periodically with the internal auditors and the independent auditors
without management present.
Because of inherent limitations in any system of internal controls, errors
or irregularities may occur and not be detected. The company believes,
however, that its system of internal controls over financial reporting and
control environment provide reasonable assurance that its assets are
safeguarded from loss or unauthorized use and that its financial records,
which are the basis for the preparation of all financial statements, are
reliable. Additionally, management believes that its disclosure controls
and procedures are in place and operating effectively. Disclosure controls
and procedures are designed to ensure that information included in
reports such as this annual report is recorded, processed, summarized,
and reported within the time periods required and that the information
disclosed is accumulated and reviewed by management for discussion
and approval.
Independent Auditors’ Report
To the Board of Trustees and Shareholders of Northeast Utilities:
We have audited the accompanying consolidated balance sheets and
consolidated statements of capitalization of Northeast Utilities and
subsidiaries (a Massachusetts Trust) (the “Company”) as of December 31,
2003 and 2002, and the related consolidated statements of income,
comprehensive income, shareholders’ equity, cash flows and income
taxes for each of the three years in the period ended December 31,
2003. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Northeast Utilities and
subsidiaries (a Massachusetts Trust) as of December 31, 2003 and 2002,
and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in Note 1C to the consolidated financial statements,
effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, and, in 2003, the
Company adopted EITF 03-11, Reporting Realized Gains and Losses on
Derivative Instruments that are Subject to FASB Statement No. 133 and
not “Held for Trading Purposes” as Defined in Issue No. 02-3, and
retroactively restated the 2002 and 2001 consolidated financial statements.
As discussed in Notes 1E and 5, the Company adopted Financial
Accounting Standards Board Interpretation No. 46, Consolidation of
Variable Interest Entities, effective July 1, 2003, and SFAS No. 142,
Goodwill and Other Intangible Assets, as of January 1, 2002, respectively.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
February 23, 2004