Comfort Inn 2004 Annual Report Download - page 23

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Choice Hotels International, Inc. and subsidiaries:
We have completed an integrated audit of Choice Hotels International, Inc. and subsidiaries’ 2004
consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and
audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
income, of shareholders’ deficit and comprehensive income and of cash flows present fairly, in all material
respects, the financial position of Choice Hotels International, Inc. and subsidiaries (the “Company”) at
December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits
of these statements 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. An audit of financial statements includes 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. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which
it accounts for stock based compensation as of January 1, 2003.
Internal control over financial reporting
Also, in our opinion, 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 December 31, 2004 based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is
fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004,
based on criteria established in Internal Control—Integrated Framework issued by the COSO. The Company’s
management is responsible 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
opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial
reporting based on our audit. We conducted our audit of internal control over financial reporting 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 effective internal control over
financial reporting was maintained in all material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial reporting, evaluating management’s
assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such
other procedures as we consider 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 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
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