Sunbeam 2006 Annual Report Download - page 42

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting principles generally accepted in the United States of
America (“GAAP”). The Company’s internal control over financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispo-
sitions of the assets of the Company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
• 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 financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inade-
quate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act of 2002, management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-
Integrated Framework.
Based on our assessment and the above criteria, management concluded that the Company maintained effective internal
control over financial reporting as of December 31, 2006.
On August 31, 2006, the Company completed the acquisition of the firelog and firestarter business of Conros
Corporation, Conros International Ltd and Java Logg Global Corporation (“Pine Mountain”), a privately held company. The
Company has excluded from its assessment of and conclusion on the effectiveness of internal controls over financial report-
ing, the Pine Mountain internal controls over financial reporting. As of December 31, 2006, Pine Mountain constituted 4%
of the Company’s consolidated assets and 2% of the Company’s net sales for the year then ended.
Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31,
2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report
which is included elsewhere herein.
Management’s Report
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