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LLY » Topics » Managements Report on Internal Control Over Financial Reporting-Eli Lilly and Company and SubsidiariesThis excerpt taken from the LLY 10-K filed Feb 22, 2010. Management’s
Report on Internal Control Over Financial Reporting—Eli
Lilly and Company and Subsidiaries
Management of Eli Lilly and Company and subsidiaries 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 Securities Exchange Act of 1934. We have global
financial policies that govern critical areas, including
internal controls, financial accounting and reporting, fiduciary
accountability, and safeguarding of corporate assets. Our
internal accounting control systems are designed to provide
reasonable assurance that assets are safeguarded, that
transactions are executed in accordance with management’s
authorization and are properly recorded, and that accounting
records are adequate for preparation of financial statements and
other financial information. A staff of internal auditors
regularly monitors, on a worldwide basis, the adequacy and
effectiveness of internal accounting controls. The general
auditor reports directly to the audit committee of the board of
directors.
We conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in
Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under this framework, we
concluded that our internal control over financial reporting was
effective as of December 31, 2009. However, 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 inadequate because of changes
in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
The internal control over financial reporting has been assessed
by Ernst & Young LLP. Their responsibility is to
evaluate whether internal control over financial reporting was
designed and operating effectively.
February 22, 2010
76
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Eli Lilly and
Company
We have audited the accompanying consolidated balance sheets of
Eli Lilly and Company and subsidiaries as of December 31,
2009 and 2008, and the related consolidated statements of
operations, cash flows, and comprehensive income (loss) for each
of the three years in the period ended December 31, 2009.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Eli Lilly and Company and subsidiaries at
December 31, 2009 and 2008, and the consolidated results of
their operations and their cash flows for each of the three
years in the period ended December 31, 2009, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), Eli
Lilly and Company and subsidiaries’ internal control over
financial reporting as of December 31, 2009, based on
criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 22, 2010
expressed an unqualified opinion thereon.
Indianapolis, Indiana
February 22, 2010
77
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Eli Lilly and
Company
We have audited Eli Lilly and Company and subsidiaries’
internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Eli Lilly and Company and
subsidiaries’ management is responsible for maintaining
effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed 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. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) 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 company
are being made only in accordance with authorizations of
management and directors of the company; and (3) 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
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Eli Lilly and Company and subsidiaries
maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2009, based on
the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
2009 consolidated financial statements of Eli Lilly and Company
and subsidiaries and our report dated February 22, 2010
expressed an unqualified opinion thereon.
Indianapolis, Indiana
February 22, 2010
78
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