**Management Report**The annual report, including the consolidated financial statements and Management’s Discussionand Analysis (MD&A), is the responsibility of the management of the Company. The consolidatedfinancial statements were prepared by management in accordance with Canadian generally acceptedaccounting principles. Where alternative accounting methods exist, management has chosen those itconsiders most appropriate in the circumstances. The significant accounting policies used aredescribed in note 1 to the consolidated financial statements. Certain amounts in the financialstatements are based on estimates and judgments relating to matters not concluded by year-end. Theintegrity of the information presented in the financial statements is the responsibility ofmanagement. Financial information presented elsewhere in this annual report has been prepared bymanagement and is consistent with the information in the consolidated financial statements.The Board of Directors is responsible for ensuring that management fulfills its responsibilitiesand for final approval of the annual consolidated financial statements. The Board has appointed anAudit Committee comprising three Directors, none of whom is an officer or employee of the Companyor its subsidiaries. The Audit Committee meets at least four times each year to discharge itsresponsibilities under a written mandate from the Board of Directors. The Audit Committee meetswith management and with the external auditors to satisfy itself that they are properly dischargingtheir responsibilities; reviews the consolidated financial statements, MD&A, and IndependentAuditors’ Report on Financial Statements; and examines other auditing and accounting matters. TheAudit Committee has reviewed the audited consolidated financial statements with management,including a discussion of the quality of the accounting principles as applied and significantjudgments affecting the Company’s consolidated financial statements. The Audit Committee hasdiscussed with the external auditors the external auditors’ judgments of the quality of thoseprinciples as applied and judgments noted above. The consolidated financial statements and MD&Ahave been reviewed by the Audit Committee and approved by the Board of Directors of Stantec Inc.The consolidated financial statements have been examined by the shareholders’ auditors, Ernst &YoungLLP, Chartered Accountants. The Independent Auditors’ Report on Financial Statements outlines thenature of their examination and their opinion on the consolidated financial statements of theCompany. The external auditors have full and unrestricted access to the Audit Committee, with orwithout management being present.**Management’s Annual Report on Internal Control over Financial Reporting**Management is responsible for establishing and maintaining an adequate system of internalcontrol over financial reporting. The Company’s internal control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financial reportingand of the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. Management conducted an evaluation of the effectiveness of thesystem of internal control over financial reporting based on the framework in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on this evaluation, management concluded that the Company’s system of internalcontrol over financial reporting was effective as at December 31, 2006.Ernst & Young LLP, which has audited the consolidated statements of the Company for the year endedDecember 31, 2006, has also issued a report on management’s assessment of the Company’s internalcontrol over financial reporting.