Lowe's 2005 Annual Report Download - page 29

L O W E ’ S ฀ ฀2 0 0 5 ฀ ฀A N N U A L ฀ ฀R E P O R T ฀
|
฀ 2 7
To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀Lowe’s฀Companies,฀Inc.฀฀
Mooresville,฀North฀Carolina
We฀have฀audited฀the฀accompanying฀consolidated฀balance฀sheets฀of฀Lowe’s฀Companies,฀
Inc.฀and฀subsidiaries฀(the฀“Company”)฀as฀of฀February฀3,฀2006฀and฀January฀28,฀2005,฀
and฀the฀related฀consolidated฀statements฀of฀earnings,฀shareholders’฀equity,฀and฀cash฀
flows฀for฀each฀of฀the฀three฀fiscal฀years฀in฀the฀period฀ended฀February฀3,฀2006.฀These฀
financial฀statements฀are฀the฀responsibility฀of฀the฀Company’s฀management.฀Our฀respon-
sibility฀is฀to฀express฀an฀opinion฀on฀these฀financial฀statements฀based฀on฀our฀audits.
฀ We฀conducted฀our฀audits฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Com-
pany฀Accounting฀Oversight฀Board฀(United฀States).฀฀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฀esti-
mates฀made฀by฀management,฀as฀well฀as฀evaluating฀the฀overall฀financial฀statement฀
presentation.฀฀We฀believe฀that฀our฀audits฀provide฀a฀reasonable฀basis฀for฀our฀opinion.
฀ In฀our฀opinion,฀such฀consolidated฀financial฀statements฀present฀fairly,฀in฀all฀
material฀respects,฀the฀financial฀position฀of฀the฀Company฀at฀February฀3,฀2006฀and฀
January฀28,฀2005,฀and฀the฀results฀of฀its฀operations฀and฀its฀cash฀flows฀for฀each฀of฀
the฀three฀fiscal฀years฀in฀the฀period฀ended฀February฀3,฀2006฀in฀conformity฀with฀
accounting฀principles฀generally฀accepted฀in฀the฀United฀States฀of฀America.฀฀
฀ We฀have฀also฀audited,฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀
Accounting฀Oversight฀Board฀(United฀States),฀the฀effectiveness฀of฀the฀Company’s฀
internal฀control฀over฀financial฀reporting฀as฀of฀February฀3,฀2006,฀based฀on฀the฀criteria฀
established฀in฀Internal฀Control—Integrated฀Framework฀issued฀by฀the฀Committee฀
of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀and฀our฀report฀dated฀
April฀6,฀2006฀expressed฀an฀unqualified฀opinion฀on฀management’s฀assessment฀of฀
the฀effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀and฀an฀
unqualified฀opinion฀on฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀over฀
financial฀reporting.
Charlotte,฀North฀Carolina
April฀6,฀2006
Report฀of฀Independent฀Registered฀Public฀Accounting฀Firm
To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀Lowe’s฀Companies,฀Inc.฀
Mooresville,฀North฀Carolina
We฀have฀audited฀management’s฀assessment,฀included฀in฀the฀accompanying฀Man-
agement’s฀Report฀on฀Internal฀Control฀Over฀Financial฀Reporting฀included฀on฀page฀26,฀
that฀Lowe’s฀Companies,฀Inc.฀and฀subsidiaries฀(the฀“Company”)฀maintained฀effective฀
internal฀control฀over฀financial฀reporting฀as฀of฀February฀3,฀2006,฀based฀on฀criteria฀
established฀in฀Internal฀Control—Integrated฀Framework฀issued฀by฀the฀Committee฀of฀
Sponsoring฀Organizations฀of฀the฀Treadway฀Commission.฀The฀Company’s฀manage-
ment฀is฀responsible฀for฀maintaining฀effective฀internal฀control฀over฀financial฀reporting฀
and฀for฀its฀assessment฀of฀the฀effectiveness฀of฀internal฀control฀over฀financial฀report-
ing.฀Our฀responsibility฀is฀to฀express฀an฀opinion฀on฀management’s฀assessment฀and฀
an฀opinion฀on฀the฀effectiveness฀of฀the฀Company’s฀internal฀control฀over฀financial฀
reporting฀based฀on฀our฀audit.
฀ We฀conducted฀our฀audit฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Com-
pany฀Accounting฀Oversight฀Board฀(United฀States).฀Those฀standards฀require฀that฀we฀
plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀about฀whether฀effective฀
internal฀control฀over฀financial฀reporting฀was฀maintained฀in฀all฀material฀respects.฀Our฀
audit฀included฀obtaining฀an฀understanding฀of฀internal฀control฀over฀financial฀report-
ing,฀evaluating฀management’s฀assessment,฀testing฀and฀evaluating฀the฀design฀and฀
operating฀effectiveness฀of฀internal฀control,฀and฀performing฀such฀other฀procedures฀as฀
we฀considered฀necessary฀in฀the฀circumstances.฀We฀believe฀that฀our฀audit฀provides฀
a฀reasonable฀basis฀for฀our฀opinions.
฀ A฀company’s฀internal฀control฀over฀financial฀reporting฀is฀a฀process฀designed฀by,฀
or฀under฀the฀supervision฀of,฀the฀company’s฀principal฀executive฀and฀principal฀financial฀
officers,฀or฀persons฀performing฀similar฀functions,฀and฀effected฀by฀the฀company’s฀
board฀of฀directors,฀management,฀and฀other฀personnel฀to฀provide฀reasonable฀assur-
ance฀regarding฀the฀reliability฀of฀financial฀reporting฀and฀the฀preparation฀of฀financial฀
statements฀for฀external฀purposes฀in฀accordance฀with฀generally฀accepted฀account-
ing฀principles.฀A฀company’s฀internal฀control฀over฀financial฀reporting฀includes฀those฀
policies฀and฀procedures฀that฀(1)฀pertain฀to฀the฀maintenance฀of฀records฀that,฀in฀rea-
sonable฀detail,฀accurately฀and฀fairly฀reflect฀the฀transactions฀and฀dispositions฀of฀the฀
assets฀of฀the฀company;฀(2)฀provide฀reasonable฀assurance฀that฀transactions฀are฀
recorded฀as฀necessary฀to฀permit฀preparation฀of฀financial฀statements฀in฀accordance฀
with฀generally฀accepted฀accounting฀principles,฀and฀that฀receipts฀and฀expenditures฀
of฀the฀company฀are฀being฀made฀only฀in฀accordance฀with฀authorizations฀of฀manage-
ment฀and฀directors฀of฀the฀company;฀and฀(3)฀provide฀reasonable฀assurance฀regarding฀
prevention฀or฀timely฀detection฀of฀unauthorized฀acquisition,฀use,฀or฀disposition฀of฀the฀
company’s฀assets฀that฀could฀have฀a฀material฀effect฀on฀the฀financial฀statements.
฀ Because฀of฀the฀inherent฀limitations฀of฀internal฀control฀over฀financial฀reporting,฀
including฀the฀possibility฀of฀collusion฀or฀improper฀management฀override฀of฀controls,฀
material฀misstatements฀due฀to฀error฀or฀fraud฀may฀not฀be฀prevented฀or฀detected฀on฀
a฀timely฀basis.฀Also,฀projections฀of฀any฀evaluation฀of฀the฀effectiveness฀of฀the฀inter-
nal฀control฀over฀financial฀reporting฀to฀future฀periods฀are฀subject฀to฀the฀risk฀that฀the฀
controls฀may฀become฀inadequate฀because฀of฀changes฀in฀conditions,฀or฀that฀the฀
degree฀of฀compliance฀with฀the฀policies฀or฀procedures฀may฀deteriorate.฀
฀ In฀our฀opinion,฀management’s฀assessment฀that฀the฀Company฀maintained฀effec-
tive฀internal฀control฀over฀financial฀reporting฀as฀of฀February฀3,฀2006,฀is฀fairly฀stated,฀in฀
all฀material฀respects,฀based฀on฀the฀criteria฀established฀in฀Internal฀Control—Integrated฀
Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀
Commission.฀Also฀in฀our฀opinion,฀the฀Company฀maintained,฀in฀all฀material฀respects,฀
effective฀internal฀control฀over฀financial฀reporting฀as฀of฀February฀3,฀2006,฀based฀on฀
the฀criteria฀established฀in฀Internal฀Control—Integrated฀Framework฀issued฀by฀the฀
Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission.
฀ We฀have฀also฀audited,฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀
Accounting฀Oversight฀Board฀(United฀States),฀the฀consolidated฀financial฀statements฀as฀
of฀and฀for฀the฀fiscal฀year฀ended฀February฀3,฀2006฀of฀the฀Company฀and฀our฀report฀dated฀
April฀6,฀2006฀expressed฀an฀unqualified฀opinion฀on฀those฀financial฀statements.
Charlotte,฀North฀Carolina
April฀6,฀2006
Report฀of฀Independent฀Registered฀Public฀Accounting฀Firm