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THE GENERAL MEETING OF NOVARTIS AG, BASEL As auditors
of the Group, we have audited the consolidated financial statements of the Novartis
Group for the year ended December 31, 2005. We have also audited Management’s
assessment on internal control over financial reporting as of December 31, 2005.
Our opinions, based on our audits, are presented below.
CONSOLIDATED FINANCIAL STATEMENTS As auditors
of the Group, we have audited the consolidated financial statements (comprising
consolidated balance sheet, income statement, cash flow statement, statement of
recognized income and expense, statement of changes in equity and notes), set
out on pages 136 to 194 of the Novartis Group for the year ended December 31,
2005. These consolidated financial statements are
the responsibility of the Board of Directors. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit. We confirm
that we meet the legal requirements concerning professional qualification and
independence. We conducted our audit in accordance
with Swiss Auditing Standards and with International Standards on Auditing and
the standards of the Public Company Accounting Oversight Board of the United States
of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free
of material misstatement. An audit of consolidated financial statements includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made and evaluating the overall consolidated financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion. In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position
of the Novartis Group, the results of its operations and its cash flows in accordance
with International Financial Reporting Standards (IFRS) and comply with Swiss
law. | | As
discussed in Note 32 to the consolidated financial statements, the Group adopted
various accounting standards effective January 1, 2005 and, as required for certain
of the accounting changes, has restated prior periods for comparison purposes.
We recommend that the consolidated financial statements submitted to you be approved.
INTERNAL CONTROL OVER FINANCIAL REPORTING We
have also audited Management’s assessment, included in the accompanying “Report
of Novartis Management on Internal Control over Financial Reporting” appearing
on page 193, that Novartis maintained effective internal control over financial
reporting as of December 31, 2005 based on criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Novartis’ Board
of Directors and Management of the Group are responsible for maintaining effective
internal control over financial reporting and Management is responsible for the
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express opinions on Management’s assessment and on the
effectiveness of the Novartis Group’s 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 of the United States of America. 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
Mmanagement’s 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. | |
