Focus - The Dow Chemical Company

Management Statement of Responsibility and Independent Auditors’ Report
Management Statement of Responsibility
The management of The Dow Chemical Company and its
subsidiaries prepared the accompanying consolidated financial
statements and has responsibility for their integrity, objectivity and
freedom from material misstatement or error. These statements
were prepared in accordance with accounting principles generally
accepted in the United States of America. The financial statements
include amounts that are based on management’s best estimates
and judgments. Management also prepared the other information
in this annual report and is responsible for its accuracy and consistency
with the financial statements. The Board of Directors,
through its Audit Committee, assumes an oversight role with
respect to the preparation of the financial statements.
Management recognizes its responsibility for fostering a strong
ethical climate so that the Company’s affairs are conducted according
to the highest standards of personal and corporate conduct.
Management has established and maintains internal controls that
provide reasonable assurance as to the integrity and reliability of the
financial statements, the protection of assets from unauthorized
use or disposition, and the prevention and detection of fraudulent
financial reporting.
Internal controls provide for appropriate division of responsibility
and are documented by written policies and procedures that are
communicated to employees with significant roles in the financial
reporting process and updated as necessary. Management continually
monitors internal controls for compliance. The Company
maintains a strong internal auditing program that independently
assesses the effectiveness of the internal controls and recommends
possible improvements.
Deloitte & Touche LLP, independent auditors, with direct access
to the Board of Directors through its Audit Committee, have audited
the consolidated financial statements prepared by the Company,
and their report follows.
Management has considered recommendations from the internal
auditors and Deloitte & Touche LLP concerning internal controls
and has taken actions that are cost-effective in the circumstances
to respond appropriately to these recommendations. Management
further believes the controls are adequate to accomplish the objectives
discussed herein.
The undersigned have executed certifications dated February 28,
2003, as required by Sections 302 and 906 of the Sarbanes-Oxley
Act of 2002, and the Company has filed those certifications as part
of, or as exhibits to, the Company’s Annual Report on Form 10-K
for the year ended December 31, 2002. In addition, William S.
Stavropoulos, Chairman, President and Chief Executive Officer of
the Company, has certified to the New York Stock Exchange
(“NYSE”) that he is unaware of any violation by the Company of
the NYSE corporate governance listing standards in effect as
of February 28, 2003.
William S. Stavropoulos J. Pedro Reinhard
Chairman, President Executive Vice President
and Chief Executive Officer and Chief Financial Officer
> 40 The Dow Chemical Company
Independent Auditors’ Report
To the Stockholders and Board of Directors of
The Dow Chemical Company:
We have audited the accompanying consolidated balance sheets
of The Dow Chemical Company and its subsidiaries as of
December 31, 2002 and 2001, and the related consolidated statements
of income, stockholders’ equity, comprehensive income
and cash flows for each of the three years in the period ended
December 31, 2002. These financial statements are the responsibility
of the Company’s management. Our responsibility is to
express an opinion on the financial statements based on our
audits. The consolidated financial statements give retroactive
effect to the merger of The Dow Chemical Company and Union
Carbide Corporation, which has been accounted for as a pooling of
interests as described in Note C to the consolidated financial statements.
We did not audit the statements of income, stockholders’
equity and cash flows of Union Carbide Corporation for the period
ended December 31, 2000, which consolidated statements reflect
total revenues of $6,550 million. Those consolidated statements
were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included
for Union Carbide Corporation for 2000, is based solely on the
report of such other auditors.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other
auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Dow Chemical Company and its subsidiaries at December 31,
2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 2002, in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Notes A and H to the consolidated financial
statements, effective January 1, 2001, The Dow Chemical
Company changed its method of accounting for derivative
instruments and hedging activities to conform to Statement of
Financial Accounting Standards No. 133.
As discussed in Notes A and F to the consolidated financial statements,
effective January 1, 2002, The Dow Chemical Company
changed its method of accounting for goodwill to conform to
Statements of Financial Accounting Standards Nos. 141 and 142.
Deloitte & Touche LLP
Midland, Michigan
January 30, 2003
(February 13, 2003 as to Note U)