2006 20-F - Sappi

PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
As of the end of the period covered by this report (the “Evaluation Date”) Sappi’s management (with
the participation of its Chief Executive Officer and Chief Financial Officer), conducted an evaluation
pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of the effectiveness of the design and operation of its disclosure controls and procedures.
Based on this evaluation, Sappi’s chief executive officer and chief financial officer concluded that, as of the
Evaluation Date, such disclosure controls and procedures were effective to provide reasonable assurance
that information required to be disclosed by Sappi in reports it files or submits under the Exchange Act is
recorded, processed, summarised and reported within the time periods specified in the rules and forms of
the Securities and Exchange Commission.
We reported a material weakness in our Annual Report on Form 20-F for fiscal 2005 relating to
weakness in our disclosure controls over US GAAP reconciliation. Subsequent to the reporting of that
weakness, a number of steps have been taken to improve these controls. These include:
• An external review by PriceWaterhouseCoopers of our US GAAP disclosure in an effort to identify
any further control weaknesses
• The establishment of an internal consulting process for all technical accounting decisions. In terms
of this process all technical accounting decisions and accounting policies are subject to specific
review in our North American office from a US GAAP standpoint
• A formal training programme for all accountants in management positions that includes both
International Financial Reporting Standards and US GAAP
Changes referred to last year in the business and information technology (IT) systems have continued
in the current financial year:
North America
A number of IT systems previously developed in Europe have been deployed in North America. The
number of peripheral IT technologies used previously has been reduced and more reliance has been placed
on our core Enterprise Resource Planning system (ERP), SAP. In particular we are anticipating an
improvement in the control environment surrounding our sales, logistical and operations planning
environments. These systems are at an advanced stage of deployment.
(b) Management’s Report on Internal Control over Financial Reporting
Management of Sappi, together with its consolidated subsidiaries, is responsible for establishing and
maintaining adequate internal control over financial reporting. Sappi’s internal control over financial
reporting is a process designed under the supervision of the chief executive and chief financial officers to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of Sappi’s
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