Walgreens 2007 Annual Report Download - page 37

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 management
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 internal
control over financial reporting of 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, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Walgreen Co. and Subsidiaries as of
August 31, 2007 and 2006, and the results of their operations and their cash flows
for each of the three years in the period ended August 31, 2007, in conformity with
accounting principles generally accepted in the United States of America. Also, in our
opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of August 31, 2007, based on the criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
As discussed in Note 1 to the consolidated financial statements, effective August 31,
2007, the Company adopted the recognition and disclosure provisions of Statement
of Financial Accounting Standards No. 158,
Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB
Statements No. 87, 88, 106, and 132(R)
, and effective September 1, 2005, the
Company changed its method of accounting for share-based payments to adopt
Statement of Financial Accounting Standards No. 123(R),
Share-Based Payment .
DELOITTE & TOUCHE LLP
Chicago, Illinois
October 26, 2007
To the Board of Directors and Shareholders of Walgreen Co.:
We have audited the accompanying consolidated balance sheets of Walgreen Co.
and Subsidiaries (the “Company”) as of August 31, 2007 and 2006, and the related
consolidated statements of earnings, shareholders’ equity, and cash flows for each of
the three years in the period ended August 31, 2007. We also have audited the
Company’s internal control over financial reporting as of August 31, 2007, based on
criteria established in
Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company’s
management is responsible for these financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control. Our responsibility is to express an opinion on these finan-
cial statements and an opinion on the Company’s internal control over financial
reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company
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 and whether effective internal control
over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures
as we considered necessary in the circumstances. We believe that our audits
provide 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
assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions
Management’s Report on Internal Control
2007 Walgreens Annual Report Page 35
Report of Independent Registered Public Accounting Firm
Jeffrey A. Rein
Chairman and Chief Executive Officer
William M. Rudolphsen
Senior Vice President
and Chief Financial Officer
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an evaluation of
the effectiveness of our internal control over financial reporting based on the framework
in
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our evaluation,
management concluded that our internal control over financial reporting was effective
as of August 31, 2007. Deloitte & Touche LLP, the company’s independent registered
public accounting firm, has audited our internal control over financial reporting,
as stated in its report which is included herein.