This excerpt taken from the NDAQ 8-K filed Jan 27, 2006.
Internal control over financial reporting
Also, in our opinion, managements assessment, included in Managements Report on Internal Control Over Financial Reporting (not appearing herein) appearing under Item 8 of Instinet Group Incorporateds Annual Report on Form 10-K for the year ended December 31, 2004, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting 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. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
A companys 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 companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys 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.
On March 31, 2005, the Company acquired Bridge Trading Company (Bridge) in a transaction accounted for as a reorganization of entities under common control. The consolidated financial statements referred to above have been retrospectively adjusted to include Bridge as if the transaction had been consummated as of January 1, 2002. The controls of Bridge were not a part of the Companys internal control over financial reporting as of December 31, 2004. Accordingly, the controls of Bridge were not included in either managements assessment of internal control over financial reporting or our audit of the Companys internal control over financial reporting. Bridge is a wholly-owned subsidiary whose total assets and total revenues represent 5.6% and 8.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2004.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 10, 2005, except with respect to our opinion on the
consolidated financial statements insofar as it relates to
Notes 3(a) and 20(a), as to which the date is January 6, 2006
Instinet Group Incorporated