John Deere 2009 Annual Report Download - page 22

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
The management of Deere & Company is responsible for
establishing and maintaining adequate internal control over
fi nancial reporting. Deere & Company’s internal control system
was designed to provide reasonable assurance regarding the
preparation and fair presentation of published fi nancial statements
in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed,
have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance
with respect to fi nancial statement preparation and presentation
in accordance with generally accepted accounting principles.
Management assessed the effectiveness of the company’s
internal control over fi nancial reporting as of October 31, 2009,
using the criteria set forth in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Based on that assessment,
management believes that, as of October 31, 2009, the company’s
internal control over fi nancial reporting was effective.
The company’s independent registered public accounting
fi rm has issued an audit report on the effectiveness of the
company’s internal control over fi nancial reporting. This report
appears below.
December 17, 2009
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Deere & Company:
We have audited the accompanying consolidated balance sheets
of Deere & Company and subsidiaries (the “Company”) as of
October 31, 2009 and 2008, and the related statements of
consolidated income, changes in consolidated stockholders’
equity, and consolidated cash fl ows for each of the three years
in the period ended October 31, 2009. We also have audited
the Company’s internal control over fi nancial reporting as of
October 31, 2009, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
The Company’s management is responsible for these fi nancial
statements, for maintaining effective internal control over
fi nancial reporting, and for its assessment of the effectiveness
of internal control over fi nancial reporting, included in the
accompanying Management’s Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion
on these fi nancial statements and an opinion on the Company’s
internal control over fi nancial reporting based on our audits.
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 fi nancial statements are free of material misstatement and
whether effective internal control over fi nancial reporting was
maintained in all material respects. Our audits of the fi nancial
statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the fi nancial state-
ments, assessing the accounting principles used and signifi cant
estimates made by management, and evaluating the overall
fi nancial statement presentation. Our audit of internal control
over fi nancial reporting included obtaining an understanding
of internal control over fi nancial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our
opinions.
A company’s internal control over fi nancial reporting is a
process designed by, or under the supervision of, the company’s
principal executive and principal fi nancial offi cers, or persons
performing similar functions, and effected by the company’s
board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of fi nancial
reporting and the preparation of fi nancial statements for external
purposes in accordance with generally accepted accounting
principles. A company’s internal control over fi nancial reporting
includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and
fairly refl ect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of fi nancial 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 reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that
could have a material effect on the fi nancial statements.
Because of the inherent limitations of internal control
over fi nancial 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 effective-
ness of the internal control over fi nancial 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, the consolidated fi nancial statements
referred to above present fairly, in all material respects, the
fi nancial position of the Company as of October 31, 2009 and
2008, and the results of their operations and their cash fl ows for
each of the three years in the period ended October 31, 2009,
in conformity with accounting principles generally accepted in
the United States of America. Also in our opinion, the Company
maintained in all material respects, effective internal control
over fi nancial reporting as of October 31, 2009, based on the
criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
As discussed in Note 7 to the consolidated fi nancial
statements, the Company adopted Financial Accounting
Standards Board (“FASB”) Accounting Standards Codifi cation
715, Compensation-Retirement Benefi ts (FASB Statement
No. 158, Employers’ Accounting for Defi ned Benefi t Pension
and Other Postretirement Plans – an amendment of FASB
Statements No. 87, 88, 106, and 132(R)), which changed its
method of accounting for pension and other postretirement
benefi ts as of October 31, 2007.
Deloitte & Touche LLP
Chicago, Illinois
December 17, 2009
22