Costco 2001 Annual Report Download - page 19

REPORT OF MANAGEMENT
The financial statements and related financial information in this Annual Report have been prepared by
and are the responsibility of the management of Costco. These financial statements have been prepared in
conformity with accounting principles generally accepted in the United States 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 modified in response to
changing business conditions and operations and as a result of recommendations by the external and
internal auditors.
The financial 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 auditing
standards generally accepted in the United States, including the related review of internal accounting
controls and financial 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 financial reporting matters. The Audit Committee, acting on behalf of the sharehold-
ers, maintains an ongoing appraisal of the internal accounting controls, the activities of the external
auditors and internal auditors and the financial condition of the Company. Both the Company’s indepen-
dent public accountants and internal auditors have complete access to the Audit Committee.
Richard A. Galanti
Executive Vice President
and Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation (a
Washington corporation) and subsidiaries (‘‘Costco’’) as of September 2, 2001 and September 3, 2000, and
the related consolidated statements of income, stockholders’ equity and cash flows for the 52 weeks ended
September 2, 2001, the 53 weeks ended September 3, 2000 and the 52 weeks ended August 29, 1999. These
financial statements are the responsibility of Costco’s management. Our responsibility is to express an
opinion on these financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Costco as of September 2, 2001 and September 3, 2000, and the results of its
operations and its cash flows for the 52 weeks ended September 2, 2001, the 53 weeks ended September 3,
2000 and the 52 weeks ended August 29, 1999, in conformity with accounting principles generally accepted
in the United States.
As explained in Note 1 to the consolidated financial 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 8, 2001
17