PG&E 2007 Annual Report Download - page 141

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139
To the Boards of Directors and
Shareholders of PG&E Corporation and
Pacifi c Gas and Electric Company
We have audited the internal control over fi nancial report-
ing of PG&E Corporation and subsidiaries (the “Company”)
and Pacifi c Gas and Electric Company and subsidiaries (the
“Utility”) as of December 31, 2007, based on criteria estab-
lished in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission. The Company’s and the Utility’s management
is responsible for maintaining effective internal control over
fi nancial reporting and for their assessment of the effective-
ness of internal control over fi nancial reporting, included
in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s and the Utility’s internal control
over fi nancial reporting based on our audits.
We conducted our audits in accordance with the stan-
dards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about
whether effective internal control over fi nancial reporting
was maintained in all material respects. Our audits included
obtaining an understanding of internal control over fi nancial
reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and perform-
ing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reason-
able basis for our opinion.
A company’s internal control over fi nancial reporting is
a process designed by, or under the supervision of, the com-
pany’s principal executive and principal fi nancial offi cers,
or persons performing similar functions, and effected by
the company’s board of directors, management, and other
personnel to provide reasonable assurance regarding the
reliability of fi nancial reporting and the preparation of
fi nancial statements for external purposes in accordance
with generally accepted accounting principles. A company’s
internal control over fi nancial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
refl ect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of fi nancial
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 detec-
tion of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
fi nancial statements.
Because of the inherent limitations of internal control
over fi nancial reporting, including the possibility of collu-
sion or improper management override of controls, material
misstatements due to error or fraud may not be prevented
or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over
fi nancial reporting to future periods are subject to the risk
that the controls may become inadequate because of changes
in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the Company and the Utility main-
tained, in all material respects, effective internal control over
fi nancial reporting as of December 31, 2007, based on the
criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We have also audited, in accordance with the standards
of the Public Company Accounting Oversight Board
(United States), the consolidated fi nancial statements and
fi nancial statement schedules as of and for the year ended
December 31, 2007 of the Company and the Utility and
our report dated February 21, 2008 expressed an unqualifi ed
opinion on those fi nancial statements and fi nancial state-
ment schedules and included an explanatory paragraph
relating to accounting changes.
DELOITTE & TOUCHE LLP
San Francisco, California
February 21, 2008
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM