BP Annual Report and Form 20-F 2011 - Company Reporting

Corporate governanceControls and proceduresEvaluation of disclosure controls and proceduresThe company maintains ‘disclosure controls and procedures’, as such termis defined in Exchange Act Rule 13a-15(e), that are designed to ensurethat information required to be disclosed in reports the company files orsubmits under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the Securities and ExchangeCommission rules and forms, and that such information is accumulatedand communicated to management, including the company’s groupchief executive and chief financial officer, as appropriate, to allow timelydecisions regarding required disclosure.In designing and evaluating our disclosure controls and procedures,our management, including the group chief executive and chief financialofficer, recognize that any controls and procedures, no matter howwell designed and operated, can provide only reasonable, not absolute,assurance that the objectives of the disclosure controls and proceduresare met. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all controlissues and instances of fraud, if any, within the company have beendetected. Further, in the design and evaluation of our disclosure controlsand procedures our management necessarily was required to apply itsjudgement in evaluating the cost-benefit relationship of possible controlsand procedures. Also, we have investments in certain unconsolidatedentities. As we do not control these entities, our disclosure controls andprocedures with respect to such entities are necessarily substantiallymore limited than those we maintain with respect to our consolidatedsubsidiaries. Because of the inherent limitations in a cost-effective controlsystem, misstatements due to error or fraud may occur and not bedetected. The company’s disclosure controls and procedures have beendesigned to meet, and management believes that they meet, reasonableassurance standards.The company’s management, with the participation of thecompany’s group chief executive and chief financial officer, has evaluatedthe effectiveness of the company’s disclosure controls and procedurespursuant to Exchange Act Rule 13a-15(b) as of the end of the periodcovered by this annual report. Based on that evaluation, the group chiefexecutive and chief financial officer have concluded that the company’sdisclosure controls and procedures were effective at a reasonableassurance level.The company’s internal control over financial reporting includes policies andprocedures that pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect transactions and dispositions of assets;provide reasonable assurances that transactions are recorded as necessaryto permit preparation of financial statements in accordance with IFRSand that receipts and expenditures are being made only in accordancewith authorizations of management and the directors of BP; and providereasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of BP’s assets that could havea material effect on our financial statements. BP’s internal control overfinancial reporting as of 31 December 2011 has been audited byErnst & Young LLP, an independent registered public accounting firm,as stated in their report appearing on page 177 of this Annual Report andForm 20-F 2011.Changes in internal control over financial reportingThere were no changes in the group’s internal controls over financialreporting that occurred during the period covered by the Form 20-F thathave materially affected or are reasonably likely to materially affect ourinternal controls over financial reporting.Corporate governanceManagement’s report on internal control over financial reportingManagement of BP is responsible for establishing and maintaining adequateinternal control over financial reporting. BP’s internal control over financialreporting is a process designed under the supervision of the principalexecutive and financial officers to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of BP’s financialstatements for external reporting purposes in accordance with IFRS.As of the end of the 2011 fiscal year, management conducted anassessment of the effectiveness of internal control over financial reportingin accordance with the Internal Control Revised Guidance for Directors onthe Combined Code (Turnbull). Based on this assessment, managementhas determined that BP’s internal control over financial reporting as of31 December 2011 was effective.BP Annual Report and Form 20-F 2011 135