Unilever 2004 Annual Report Download - page 95

92 Unilever Annual Report and Accounts 2004
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.
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
Auditors’ report, 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 2005 and 2006, 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 framework, 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 addressed
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 framework is supported through a Code of Business
Principles, which sets standards of professionalism and integrity
for its operations worldwide, and through an Operational
Controls Assessment process, which requires the senior
management in each business unit to assess the effectiveness of
financial controls annually and of all other operational controls
over a three-year cycle.
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 57.
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 Independent Non-Executive 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 2004 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 2004 in accordance with
this guidance, and have ensured that the necessary actions have
been or are being taken to address any weaknesses or
deficiencies arising out of that review.
At the end of 2006, Unilever will be required by Section 404 of
the Sarbanes-Oxley Act of 2002 to report on the effectiveness of
internal control over financial reporting. The evaluation work
necessary to meet this specific requirement is under way.
Based on an evaluation by the Boards, each Chairman and the
Financial Director concluded that the design and operation of the
Group’s disclosure controls and procedures as at 31 December
2004 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.