This excerpt taken from the UNH 10-K filed Feb 11, 2009.
Report of Management on Internal Control over Financial Reporting as of December 31, 2008
The Companys management 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. The Companys internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. The 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 consolidated 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 consolidated 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.
Management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework. Based on our assessment and those criteria, we believe that, as of December 31, 2008, the Company maintained effective internal control over financial reporting.
Management excluded from its assessment of the effectiveness of the Companys internal control over financial reporting the internal controls of Sierra Health Services, Inc. (Sierra) and Unison Health Plans (Unison) which were acquired by the Company on February 25, 2008 and May 30, 2008, respectively, and are included in the Companys consolidated financial statements for the period from the dates of acquisition through year end. Such exclusion was in accordance with Securities and Exchange Commission guidance that an assessment of a recently acquired business may be omitted in managements report on internal controls over financial reporting in the year of acquisition. Net and total assets of Sierra represented approximately 1% and 6%, respectively, of the Companys consolidated net and total assets as of December 31, 2008, and approximately 2% of consolidated revenues and approximately 4% of net earnings for the year then ended. Net and total assets of Unison represented approximately 0% and 2%, respectively, of the Companys consolidated net and total assets as of December 31, 2008, and approximately 1% of consolidated revenue and net earnings for the year then ended.
Changes to certain processes, information technology systems, and other components of internal control resulting from the acquisition of Sierra and Unison may occur and will be evaluated by management as such integration activities are implemented.
The Companys independent registered public accounting firm has audited the Companys internal control over financial reporting as of December 31, 2008, as stated in the Report of Independent Registered Public Accounting Firm, appearing under Item 9A, which expresses an unqualified opinion on the effectiveness of the Companys internal controls over financial reporting as of December 31, 2008.
February 11, 2009