Dillard's 2008 Annual Report Download - page 51

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The financial statements, financial analysis and all other information in this Annual Report on Form 10-K
were prepared by management, who is responsible for their integrity and objectivity and for establishing and
maintaining adequate internal controls over financial reporting.
The Company’s internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. The Company’s
internal control over financial reporting includes those policies and procedures that:
i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets of the Company;
ii. 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
iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or dispositions of the Company’s assets that could have a material effect on the financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibility of human
error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide
only reasonable assurances with respect to financial statement preparation. Further, because of changes in
conditions, the effectiveness of internal controls may vary over time.
Management assessed the design and effectiveness of the Company’s internal control over financial
reporting as of January 31, 2009. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—
Integrated Framework. Based on management’s assessment using those criteria, it believes that, as of January 31,
2009, the Company’s internal control over financial reporting is effective.
As described in Note 2 of Notes to Consolidated Financial Statements, on August 29, 2008, the Company
purchased the remaining interest in CDI Contractors, LLC and CDI Contractors, Inc. (“CDI”), a former 50%
equity joint venture of the Company. As permitted under Section 404 of the Sarbanes-Oxley Act, the Company
excluded CDI from the scope of the internal control evaluation. CDI constituted 1% and 2% of net and total
assets, respectively, 1% of revenues and 1% of the net loss of the consolidated financial statement amounts as of
and for the year ended January 31, 2009.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the financial
statements of the Company for the fiscal years ended January 31, 2009, February 2, 2008 and February 3, 2007
and has attested to management’s assertion regarding the effectiveness of the Company’s internal control over
financial reporting as of January 31, 2009. Their report is presented on the following page. The independent
registered public accountants and internal auditors advise management of the results of their audits and make
recommendations to improve the system of internal controls. Management evaluates the audit recommendations
and takes appropriate action.
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