Unilever 2003 Annual Report Download - page 74

Unilever Annual Report & Accounts and Form 20-F 2003 71
Statement of Directors’ responsibilities
Annual accounts
The Directors are required by Title 9, Book 2 of the Civil Code in
the Netherlands and the United Kingdom Companies Act 1985
to prepare accounts for each financial year which give a true and
fair view of the state of affairs of the Unilever Group, NV and PLC
as at the end of the financial year and of the profit or loss for
that year.
The Directors consider that in preparing the accounts, the Group,
NV and PLC have used the most appropriate accounting policies,
consistently applied and supported by reasonable and prudent
judgements and estimates, and that all United Kingdom
accounting standards which they consider to be applicable have
been followed, except as noted under ‘Accounting standards’ on
page 73.
The Directors have responsibility for ensuring that NV and PLC
keep accounting records which disclose with reasonable accuracy
their financial position and which enable the Directors to ensure
that the accounts comply with the relevant legislation. They also
have a general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
This statement, which should be read in conjunction with the
‘Report of independent auditors’ set out on page 72, is made
with a view to distinguishing for shareholders the respective
responsibilities of the Directors and of the auditors in relation
to the accounts.
A copy of the financial statements of the Unilever Group is placed
on our website at www.unilever.com. The maintenance and
integrity of the website is the responsibility of the Directors, and
the work carried out by the auditors does not involve
consideration of these matters. Accordingly, the auditors accept
no responsibility for any changes that may have occurred to the
financial statements since they were initially placed on the
website. Legislation in the United Kingdom and the Netherlands
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Going concern
The Directors continue to adopt the going concern basis
in preparing the accounts. This is because the Directors,
after making enquiries and following a review of the Group’s
budget for 2004 and 2005, including cash flows and borrowing
facilities, consider that the Group has adequate resources to
continue in operation for the foreseeable future.
Internal and disclosure controls and procedures
Unilever has a well established control environment, which
is well documented and regularly reviewed by the Boards.
This incorporates risk management, internal control procedures
and disclosure controls and procedures which are designed to
provide reasonable, but not absolute, assurance that assets are
safeguarded, the risks facing the business are being controlled
and all information required to be disclosed is reported to the
Group’s senior management, including where appropriate the
Chairmen and Financial Director, within the required timeframe.
Our procedures cover financial, operational, social and
environmental risks and regulatory matters. The Boards of NV
and PLC have also established a clear organisational structure,
including delegation of appropriate authorities. The Group’s
control environment is supported through a Code of Business
Principles, which sets standards of professionalism and integrity
for its operations worldwide.
The Boards have overall responsibility for establishing
key procedures designed to achieve systems of internal control
and disclosure control and for reviewing and evaluating their
effectiveness. The day-to-day responsibility for implementation
of these procedures and ongoing monitoring of risk and
the effectiveness of controls rests with the Group’s senior
management at individual operating company and Business
Group level. Business Groups, each of which has its own Risk
Committee, review, on an ongoing basis, the risks faced by their
group and the related internal control arrangements and provide
written reports to the Corporate Risk Committee, the composition
and function of which are set out on page 48.
Unilever’s corporate internal audit function plays a key role in
providing an objective view and continuous reassurance of the
effectiveness of the risk management and related control systems
throughout Unilever to both operating management and the
Boards. The Group has an independent Audit Committee, entirely
comprised of Advisory Directors. This Committee meets regularly
with the Chief Auditor and the external auditors.
Unilever has a comprehensive budgeting system with an annual
budget approved by the Boards, which is regularly reviewed and
updated. Performance is monitored against budget and the
previous year through monthly and quarterly reporting routines.
The Group reports to shareholders quarterly.
Unilever’s system of risk management has been in place
throughout 2003 and up to the date of this report, and complies
with the recommendations of ’Internal Control – Guidance for
Directors on the Combined Code’, published by the Internal
Control Working Party of the Institute of Chartered Accountants
in England & Wales in September 1999. The Boards have carried
out an annual review of the effectiveness of the systems of risk
management and internal control during 2003 in accordance with
this guidance, and have ensured that the necessary actions have
been taken to address any weaknesses or deficiencies arising out
of that review.
Based on an evaluation by the Boards, which comprises the
Chairmen, the Financial Director and the Group’s senior
management, each Chairman and the Financial Director
concluded that the design and operation of the Group’s
disclosure controls and procedures as at 31 December 2003
were reasonably effective and that subsequently there have
been no significant changes in the Group’s internal controls
or in other factors that could significantly affect those controls.
It is Unilever’s policy to bring acquired companies within the
Group’s governance procedures as soon as is practicable and,
in any event, by the end of the first full year of operation.