Costco 2005 Annual Report Download - page 36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Costco Wholesale Corporation:
We have audited management’s assessment, included in the accompanying Management’s Annual Report
on Internal Control over Financial Reporting appearing under Item 8,that Costco Wholesale Corporation and
subsidiaries (the Company) maintained effective internal control over financial reporting as of August 28, 2005,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintain-
ing effective internal control over financial reporting and for its assessment of the effectiveness of internal con-
trol over financial reporting. Our responsibility is to express an opinion on management’s assessment and an
opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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. Our au-
dit included 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 considered necessary in the circumstances. We believe that our audit provides a reason-
able basis for our opinion.
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
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 statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance 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 compa-
ny’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect mis-
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that con-
trols may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
In our opinion, management’s assessment that the Company maintained effective internal control over finan-
cial reporting as of August 28, 2005, is fairly stated, in all material respects, based on criteria established in In-
ternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.Also, in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of August 28, 2005, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of the Company as of August 28, 2005 and August 29 2004, and
the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows
for the 52 weeks ended August 28, 2005, August 29, 2004 and August 31, 2003 and our report dated No-
vember 9, 2005 expressed an unqualified opinion on those consolidated financial statements. Our report refers to
the Company’s change in method of accounting for cash consideration received from a vendor to conform to the
requirements of Emerging Issues Task Force No. 03-10, effective February 16, 2004 and Issue No. 02-16 effec-
tive during the year ended August 31, 2003.
Seattle, Washington
November 9, 2005
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