KPMG, IBM to Collaborate on Product Aimed at Helping CEOs, CFOs Improve Financial Reporting

NEW YORK, and SOMERS, N.Y., October 7, 2003 -- KPMG LLP, a leading U.S. audit and tax firm, and IBM, the world's largest information technology company, announced today an agreement for IBM to develop and market a product that will leverage KPMG's internal controls knowledge and its industry-sector experience. The product provides a means for companies to better understand and document internal controls over financial reporting.

IBM, with advice from KPMG, will design Lotus Workplace for Business Controls and Reporting, a new software product designed to help companies manage processes, controls and information that may be useful to companies in their efforts to comply with the internal-control reporting requirements of Section 404 of the Sarbanes-Oxley Act. The tool combines IBM's software, consulting and service capabilities with KPMG's knowledge of internal controls. The product is intended to provide a foundation for a company's financial reporting processes and an organized approach to gather information about internal controls.

The initial IBM solution includes a Control Assessment Template, a development tool that runs on IBM middleware software and is compatible with the KPMG Catalog. The new product also embeds capabilities from IBM WebSphere Portal and IBM DB2 Content Manager software. IBM WebSphere Portal, the industry-leading portal solution, allows customers easy access and integration of disparate applications, business processes and data while collaborating with colleagues on compliance issues via a single Web-based environment and sign-on. IBM's DB2 Content Manager software will serve as the repository for these critical assets, including documents and images, audio and video files and e-mail attachments containing contracts.

"Customers are redefining their financial reporting infrastructure to meet new compliance demands," said Ambuj Goyal, General Manager, IBM Lotus Software, IBM Software Group. "With the combination of premier internal control advisers in KPMG, and leading middleware solutions and top strategic consulting services from IBM, the organizations together offer a very comprehensive approach."

For its part, KPMG will offer the advisory services it provides to clients, in addition to its "control catalogs" – or knowledge databases – of broad-based, industry-sector knowledge that can help companies with their business processes and internal controls as part of their financial reporting activities. The catalogs, which describe to companies the wide range of internal controls available to them, reflect KPMG's extensive experience working within industry sectors and the leading ERP solutions. Users, of course, determine which controls to employ. Companies also may choose to use either the KPMG catalogs or other databases in conjunction with the IBM software tool. KPMG will maintain their control catalogs to reflect current intelligence regarding specific industry-sector, internal-control information.

Timothy Flynn, KPMG's Vice Chair of Audit and Risk-Advisory Services, said, "Companies are increasingly challenged to report their financial results in a clearer, faster and more cost-efficient way. At the same time, companies need to comply with a continuing flow of changing regulatory demands - and therefore need to're-architecture' their financial reporting processes. This new tool combines IBM's diverse scope of technology and client support with KPMG's deep industry insights to help companies understand their internal controls, with an aim toward cost-effectively improving their financial reporting processes."

In support of this agreement, IBM's Business Consulting Services (BCS) will offer its comprehensive portfolio of financial management consulting services to assist clients with financial controls and business reporting. KPMG can offer companies its internal control advisory services to assist companies in understanding and improving their internal controls and reporting processes. By selecting IBM's software services and KPMG's advisory services, companies can achieve end-to-end offerings that effectively combine technology and industry-sector knowledge to help document their controls as part of their financial reporting process. IBM Software Services for Lotus will also be available to help organizations deploy, customize, integrate and operate the tool.

Availability

Lotus Workplace for Business Controls and Reporting v1 is expected to be available in Q4 2003. For customers who are ready to begin deploying a solution, IBM and KPMG are making available immediately a "Get Ready" Services Offering to help prepare an organization for deployment of the Lotus Workplace for Business Controls and Reporting solution.

About IBM

IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key IBM Business Partners, IBM offers a wide range of services, solutions and technologies that enable customers, large and small, to take full advantage of the new era of e-business. For additional information, see: www.ibm.com.

About KPMG

KPMG LLP is the audit and tax firm that has maintained a continuous commitment throughout its history to providing leadership, integrity and quality to the capital markets. The Big Four firm with the strongest growth record over the past decade, KPMG offers clients scale, global reach, industry insights and a multidisciplinary range of services. KPMG LLP (www.us.kpmg.com) is the U.S. member firm of KPMG International. KPMG International's member firms have nearly 100,000 professionals, including 6,600 partners, in 150 countries.

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IBM, Lotus, and WebSphere are trademarks of IBM Corporation in the United States, other countries, or both.

Other company, product or service names may be trademarks or service marks of other.

Customers will be responsible for ensuring their own compliance with the Sarbanes-Oxley Act. It is a customer's sole responsibility to obtain advice of competent legal counsel as to the identification and interpretation of any relevant laws, including but not limited to, the Sarbanes-Oxley Act, that may affect customer's business and any actions customer may need to take to comply with such laws. KPMG and IBM do not provide legal advice or represent or warrant that services or products will ensure that a customer is in compliance with any law.

                       LOTUS PRESS RELEASE

                       Contact:
                       Mary Rose Greenough 
                       Lotus Software
                       IBM Software Group
                       +1-617-693-1039
                       mary_rose_greenough@us.ibm.com

                       George Ledwith
                       KPMG LLP
                       +1-201-505-3543
                       gledwith@KPMG.com