Annual Report - CoBank

Management’s Report on Internal Control Over Financial ReportingCoBank, ACBOur management is responsible for establishing and maintaining adequate internal control over financial reporting. CoBank’sinternal control over financial reporting is a process designed under the supervision of our president and chief executive officer andour chief financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of theBank’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. As ofthe end of the Bank’s 2011 fiscal year, management conducted an assessment of the effectiveness of the Bank’s internal control overfinancial reporting based on the framework established in Internal Control – Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that the Bank’sinternal control over financial reporting is effective as of December 31, 2011.Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally acceptedaccounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management andthe directors of CoBank; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,use or disposition of the Bank’s assets that could have a material effect on our financial statements.The effectiveness of the Bank’s internal control over financial reporting as of December 31, 2011 has been audited byPricewaterhouseCoopers LLP, independent auditors, as stated in their report appearing on pages 112 and 113, which expresses anunqualified opinion on the effectiveness of the Bank’s internal control over financial reporting as of December 31, 2011. There havebeen no changes in the Bank’s internal control over financial reporting that occurred during our most recent fiscal quarter (i.e., thefourth quarter of 2011) that have materially affected, or are reasonably likely to materially affect, the Bank’s internal control overfinancial reporting.CoBank 2011 Annual Report114