SUNH » Topics » Management's Report on Internal Control over Financial Reporting

This excerpt taken from the SUNH 10-K filed Mar 10, 2006.

Management's Report on Internal Control over Financial Reporting

     Management is responsible for establishing and maintaining adequate internal control over financial reporting. We maintain a system of internal control that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the consolidated financial statements, as well as to safeguard assets from unauthorized use or disposition.

     We acquired Peak Medical Corporation in December 2005 and excluded it from our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005. For the year ended December 31, 2005, Peak contributed $21.1 million, or 2.4%, of our total revenues, and, as of December 31, 2005, accounted for $112.6 million, or 25.8%, of our total assets, excluding goodwill that was recorded in connection with the acquisition of Peak of $75.9 million.

    We conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2005 based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). This evaluation included reviewing the documentation of controls, evaluating the design effectiveness of controls, testing the operating effectiveness of controls and making a conclusion on this evaluation. Although there are inherent limitations in the effectiveness of any system of internal control over financial reporting, based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2005.

     Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein. (See page F-3).

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