JetBlue Airlines 2005 Annual Report Download - page 73

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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
JetBlue Airways Corporation
We have audited management’s assessment, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting, that JetBlue Airways Corporation did not maintain
effective internal control over financial reporting as of December 31, 2005, because of the effect of a
material weakness due to ineffective controls over the determination of the fair value of certain of the
Company’s derivative financial instruments, based on criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). JetBlue Airways Corporation’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 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 audit 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 reasonable 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 company’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 misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of control deficiencies, that results in
more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. The following material weakness has been identified and
included in management’s assessment. As of December 31, 2005, controls over the review of the
valuation of certain derivative financial instruments were ineffective resulting in the inappropriate
valuation of certain instruments entered into during the fourth quarter of 2005. This deficiency
resulted in an adjustment to the consolidated financial statements to reflect fair values as required
under U.S. generally accepted accounting principles, which increased other non operating income and
investment securities. This material weakness was considered in determining the nature, timing, and
extent of audit tests applied in our audit of the 2005 financial statements, and this report does not
affect our report dated February 9, 2006 on those financial statements.
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