Costco 2006 Annual Report Download - page 38

The consolidated financial statements have been audited by KPMG LLP, an independent registered
public accounting firm, who conducted their audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). The independent registered public accounting
firm’s responsibility is to express an opinion as to the fairness with which such financial statements
present our financial position, results of operations and cash flows in accordance with accounting
principles generally accepted in the United States.
Disclosure Controls and Procedures
Our management, including the Chief Executive Officer (principal executive officer) and Chief Financial
Officer (principal financial officer), evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (Exchange Act) as
of September 3, 2006. Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective in ensuring that information
required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and procedures that: (1) pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions
and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in accordance with
appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that could have a material effect
on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of our management, we assessed the effectiveness of
our internal control over financial reporting as of September 3, 2006, using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework. Based on its assessment, management has concluded that our internal control
over financial reporting was effective as of September 3, 2006.
KPMG LLP, an independent registered public accounting firm, has audited management’s assessment
of the effectiveness of our internal control over financial reporting as of September 3, 2006, as stated in
their audit report herein, which appears on page 38.
James D. Sinegal Richard A. Galanti
President Executive Vice President
Chief Executive Officer Chief Financial Officer
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