Walmart 2007 Annual Report Download - page 64

Wal-Mart 2007 Annual Report 62
Management’s Report to Our Shareholders
Management of Wal-Mart Stores, Inc. (“Wal-Mart” or the “Company”)
is responsible for the preparation, integrity and objectivity of Wal-Mart’s
Consolidated Financial Statements and other  nancial information
contained in this Annual Report to Shareholders. Those Consolidated
Financial Statements were prepared in conformity with accounting
principles generally accepted in the United States. In preparing those
Consolidated Financial Statements, management was required to make
certain estimates and judgments, which are based upon currently
available information and management’s view of current conditions
and circumstances.
The Audit Committee of the Board of Directors, which consists solely
of independent directors, oversees our process of reporting  nancial
information and the audit of our Consolidated Financial Statements.
The Audit Committee stays informed of the  nancial condition of
Wal-Mart and regularly reviews management’s  nancial policies and
procedures, the independence of our independent auditors, our
internal control and the objectivity of our  nancial reporting. Both
the independent auditors and the internal auditors have free access
to the Audit Committee and meet with the Audit Committee period-
ically, both with and without management present.
Acting through our Audit Committee, we have retained Ernst & Young
LLP, an independent registered public accounting  rm, to audit our
Consolidated Financial Statements found in this Annual Report. We
have made available to Ernst & Young LLP all of our  nancial records
and related data in connection with their audit of our Consolidated
Financial Statements.
We have  led with the Securities and Exchange Commission (“SEC”) the
required certi cations related to our Consolidated Financial Statements
as of and for the year ended January 31, 2007. These certi cations are
attached as exhibits to our Annual Report on Form 10-K for the year
ended January 31, 2007. Additionally, we have also provided to the
New York Stock Exchange the required annual certi cation of our
Chief Executive O cer regarding our compliance with the New York
Stock Exchange’s corporate governance listing standards.
Report on Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining
adequate internal control over  nancial reporting. Internal control over
 nancial reporting is a process designed to provide reasonable assur-
ance regarding the reliability of  nancial reporting and the preparation
of  nancial statements for external reporting purposes in accordance
with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over  nancial report-
ing may not prevent or detect misstatements. Management has
assessed the effectiveness of the Company’s internal control over
 nancial reporting as of January 31, 2007. In making its assessment,
management has utilized the criteria set forth by the Committee of
Sponsoring Organizations (“COSO”) of the Treadway Commission in
Internal Control — Integrated Framework. Management concluded that
based on its assessment, Wal-Mart’s internal control over  nancial report-
ing was e ective as of January 31, 2007. Management’s assessment
of the e ectiveness of the Company’s internal control over  nancial
reporting as of January 31, 2007, has been audited by Ernst & Young
LLP, an independent registered public accounting  rm, as stated in
their report which appears in this Annual Report to Shareholders.
Management’s assessment of the e ectiveness of the Company’s internal
control over  nancial reporting excluded Central American Retail Holding
Company, of which the Company acquired majority ownership in  scal
2007. This entity, now known as Wal-Mart Central America, represented,
in the aggregate, 0.9% and 0.6% of consolidated total assets and con-
solidated net sales, respectively, of the Company as of and for the year
ended January 31, 2007. This acquisition is more fully discussed in
Note 6 to our Consolidated Financial Statements for  scal 2007. Under
guidelines established by the SEC, companies are allowed to exclude
acquisitions from their  rst assessment of internal control over  nancial
reporting following the date of the acquisition.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide
reasonable assurance that information required to be timely disclosed
is accumulated and communicated to management in a timely fashion.
Management has assessed the e ectiveness of these disclosure controls
and procedures as of January 31, 2007, and determined they were e ec-
tive as of that date to provide reasonable assurance that information
required to be disclosed by us in the reports we  le or submit under the
Securities Exchange Act of 1934, as amended, was accumulated and
communicated to management, as appropriate, to allow timely decisions
regarding required disclosure and were e ective to provide reasonable
assurance that such information is recorded, processed, summarized and
reported within the time periods speci ed by the SEC’s rules and forms.
Report on Ethical Standards
Our Company was founded on the belief that open communications
and the highest standards of ethics are necessary to be successful. Our
long-standing “Open Door” communication policy helps management
be aware of and address issues in a timely and e ective manner. Through
the open door policy all associates are encouraged to inform manage-
ment at the appropriate level when they are concerned about any
matter pertaining to Wal-Mart.
Wal-Mart has adopted a Statement of Ethics to guide our associates in
the continued observance of high ethical standards such as honesty,
integrity and compliance with the law in the conduct of Wal-Mart’s
business. Familiarity and compliance with the Statement of Ethics is
required of all associates who are part of management. The Company
also maintains a separate Code of Ethics for our senior  nancial o cers.
Wal-Mart also has in place a Related-Party Transaction Policy. This policy
applies to Wal-Mart’s senior o cers and directors and requires material
related-party transactions to be reviewed by the Audit Committee. The
senior o cers and directors are required to report material related-
party transactions to Wal-Mart. We maintain an ethics o ce which
oversees and administers an ethics hotline. The ethics hotline provides a
channel for associates to make con dential and anonymous complaints
regarding potential violations of our statements of ethics, including
violations related to  nancial or accounting matters.
H. Lee Scott, Jr.
President and Chief Executive O cer
Thomas M. Schoewe
Executive Vice President and Chief Financial O cer