LeapFrog 2003 Annual Report Download - page 60

CEO and CFO Certifications
Attached as exhibits to this annual report, there are “Certifications” of our CEO and the CFO required by
Rule 13a-14(a) of the Securities Exchange Act of 1934, or the Rule 13a-14(a) Certifications. This Controls and
Procedures section of the annual report includes the information concerning the Controls Evaluation referred to
in the Rule 13a-14(a) Certifications and it should be read in conjunction with the Rule 13a-14(a) Certifications
for a more complete understanding of the topics presented.
Disclosure Controls and Internal Control Over Financial Reporting
Disclosure Controls are procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act, such as this annual report, is recorded, processed, summarized and reported
within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure
Controls are also designed to ensure that such information is accumulated and communicated to our
management, including the CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure. Internal control over financial reporting is a process designed by, or under the supervision of, an
issuer’s principal executive and principal financial officers, and effected by the issuer’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 generally accepted
accounting principles and includes those policies and procedures that:
•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the issuer;
•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 issuer are being made only in accordance with authorizations of management and
directors of the issuer; and
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the issuer’s assets that could have a material effect on the financial statements.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls or our internal
control over financial reporting will prevent all error and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives
will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, within our company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or
by management override of the controls. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance with its policies or procedures.
Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may
occur and not be detected.
Conclusions
Based upon the Controls Evaluation, our CEO and CFO have concluded that, subject to the limitations noted
above, our Disclosure Controls are effective to ensure that material information relating to our business is made
known to management, including the CEO and CFO, particularly during the period when our periodic reports are
being prepared.
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