Management's report on internal control
Management’s report on internal control over financial The Board of Management of Koninklijke Philips Electronics N.V. (the Company) is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the US Securities Exchange Act). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with IFRS as issued by the IASB. Internal control over financial reporting includes maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. The Board of Management conducted an assessment of the Company’s internal control over financial reporting based on the “Internal Control-Integrated Framework” established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that assessment, the Board of Management concluded that, as of December 31, 2009, the Company’s internal control over Group financial reporting is considered effective. The Board of Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, excluded the following companies acquired by the Company after January 1, 2009: Meditronics Healthcare Pvt. Ltd., Ilti Luce S.r.l., Dynalite Intelligent Light Pty. Limited, Traxtal Inc., Teletrol Systems Inc., and Saeco International Group S.p.A. These acquisitions are wholly-owned subsidiaries whose total assets represented 1.7% of consolidated total assets and whose net sales represented 0.7% of consolidated net sales of the Company as of and for the year ended December 31, 2009. If adequately disclosed, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the year of acquisition while integrating the acquired company under guidelines established by the US Securities and Exchange Commission. The effectiveness of the Company’s internal control over IFRS financial reporting as of December 31, 2009, as included in this chapter Group financial statements, has been audited by KPMG Accountants N.V., an independent registered public accounting firm, as stated in their report which follows hereafter. Board of Management February 22, 2010
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