Costco 2000 Annual Report Download - page 17

REPORT OF MANAGEMENT
The Ñnancial statements and related Ñnancial information in this Annual Report have been prepared by and
are the responsibility of the management of Costco. These Ñnancial statements have been prepared in
conformity with generally accepted accounting principles and necessarily include certain estimates and
judgments based on the best information available to management.
The Company maintains a system of internal accounting controls, which is supported by an internal audit
program, and is designed to provide reasonable assurance that the Company's assets are safeguarded and
transactions are properly recorded. This system is continually reviewed and modiÑed in response to changing
business conditions and operations and as a result of recommendations by the external and internal auditors.
The Ñnancial statements of the Company have been audited by Arthur Andersen LLP, independent public
accountants. Their accompanying report is based on an audit conducted in accordance with generally accepted
auditing standards, including the related review of internal accounting controls and Ñnancial reporting matters.
The Audit Committee of the Board of Directors, consisting solely of outside Directors, meets periodically with
the independent public accountants, the internal auditors and representatives of management to discuss
auditing and Ñnancial reporting matters. The Audit Committee, acting on behalf of the shareholders,
maintains an ongoing appraisal of the internal accounting controls, the activities of the external auditors and
internal auditors and the Ñnancial condition of the Company. Both the Company's independent public
accountants and internal auditors have complete access to the Audit Committee.
Richard A. Galanti
Executive Vice President
and Chief Financial OÇcer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Costco Wholesale Corporation:
We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation (a
Washington corporation) and subsidiaries (""Costco'') as of September 3, 2000 and August 29, 1999, and the
related consolidated statements of income, stockholders' equity and cash Öows for the 53 weeks ended
September 3, 2000 and the 52 weeks ended August 29, 1999 and August 30, 1998. These Ñnancial statements
are the responsibility of Costco's management. Our responsibility is to express an opinion on these Ñnancial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
Ñnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Ñnancial statements. An audit also includes assessing the
accounting principles used and signiÑcant estimates made by management, as well as evaluating the overall
Ñnancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the Ñnancial statements referred to above present fairly, in all material respects, the Ñnancial
position of Costco as of September 3, 2000 and August 29, 1999, and the results of its operations and its cash
Öows for the 53 weeks ended September 3, 2000 and the 52 weeks ended August 29, 1999 and August 30,
1998, in conformity with accounting principles generally accepted in the United States.
As explained in Note 1 to the consolidated Ñnancial statements, during the year ended August 29, 1999, the
Company changed its method of accounting for membership fee income from a cash basis to a deferred basis
whereby membership fee income is recognized ratably over the one-year life of the membership.
Seattle, Washington
October 10, 2000
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