Banana Republic 2005 Annual Report Download - page 38

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36 gap inc. 2005 annual report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of The Gap, Inc.:
We have audited the accompanying consolidated balance sheets of The Gap, Inc. and subsidiaries as of January 28, 2006 and January 29, 2005, and
the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended January 28,
2006. We also have audited management’s assessment, included in the accompanying “Management’s Report on Internal Control over Financial
Reporting”, that the Company maintained effective internal control over financial reporting as of January 28, 2006, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s man-
agement 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. Our responsibility is to express an opinion on these financial statements, an opinion on
management’s assessment, and an opinion on the effectiveness of 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 audit of financial statements included ex-
amining, 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, evaluating management’s assessment, testing and evaluat-
ing the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circum-
stances. 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 per-
sonnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external pur-
poses 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 are recorded as necessary to permit preparation of financial state-
ments in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in ac-
cordance 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 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, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Gap, Inc.
and subsidiaries as of January 28, 2006 and January 29, 2005, and the results of their operations and their cash flows for each of the three years in
the period ended January 28, 2006, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion,
management’s assessment that the Company maintained effective internal control over financial reporting as of January 28, 2006, is fairly stated, in
all material respects, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organiza-
tions of the Treadway Commission. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of January 28, 2006, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
San Francisco, California
March 27, 2006