Unilever 2007 Annual Report Download - page 68

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, and the NV
and PLC entities as at the end of the financial year and of the
profit or loss and cash flows for that year.
The Directors consider that, in preparing the accounts, the Group
and the NV and PLC entities have used the most appropriate
accounting policies, consistently applied and supported by
reasonable and prudent judgements and estimates, and that all
International Financial Reporting Standards as adopted by the EU
and as issued by the International Accounting Standards Board (in
the case of the consolidated accounts) and United Kingdom
accounting standards (in the case of the parent company accounts)
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/investorcentre The
maintenance and integrity of the website are 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.
UK law sets out additional responsibilities for the Directors of
PLC regarding disclosure of information to auditors. Disclosure
in respect of these is made on page 136.
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 2008 and 2009, 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
documented and regularly reviewed by the Boards. This
incorporates risk management, internal control procedures and
disclosure controls and procedures (including the operation of
the Disclosure Committee – see page 38) 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
Group Chief Executive and Chief Financial Officer, within the
required timeframe.
Our procedures cover financial, operational, social, strategic 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. In our major units financial controls are subject
to a comprehensive risk-based assessment annually with controls
in the remaining units being reviewed over a one- to 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 regional
level. Regions review, on an ongoing basis, the risks faced by
their group and the related internal control arrangements, and
provide written reports to the Group Chief Executive.
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,
comprised entirely 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 2007 and up to the date of this report, and complies
with the recommendations of ’Internal Control – Revised
Guidance for Directors on the Combined Code’, published by
the Internal Control Working Party of the Institute of Chartered
Accountants in England & Wales in October 2005. The Boards
have carried out an annual review of the effectiveness of the
systems of risk management and internal control during 2007
in accordance with this guidance, and have ensured that the
necessary actions have been or are being taken to address
any significant failings arising out of that review.
Based on an evaluation by the Boards, the Group Chief Executive
and the Chief Financial Officer concluded that the design and
operation of the Group’s disclosure controls and procedures as at
31 December 2007 were 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 practice 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.
Unilever is required by Section 404 of the US Sarbanes-Oxley
Act of 2002 to report on the effectiveness of internal control
over financial reporting. This requirement will be reported on
separately and will form part of Unilever’s Annual Report on
Form 20-F.
66 Unilever Annual Report and Accounts 2007
Financial statements continued