PG&E 2010 Annual Report Download - page 120

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the BoardofDirectorsand
Shareholders of PG&E Corporation
and Pacific Gas and Electric Company
SanFrancisco, California
We have audited the accompanying consolidated balance
sheets of PG&E Corporation and subsidiaries (the
“Company”) and of Pacific Gas and Electric Company
and subsidiaries (the “Utility”) as of December 31, 2010
and 2009, and the Company’s related consolidated
statements of income, equity, and cash flows and the
Utility’s related consolidated statements of income,
shareholders’ equity, and cash flows for each of the three
years in the period ended December 31, 2010. We also
have audited the Company’s and the Utility’s internal
control over financial reporting as of December 31, 2010,
based on criteria established 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 these financial statements, for maintaining effective
internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on
these financial statements and an opinion on the
Company’s and the Utility’s internal control over
financial reporting based on our audits.
We conducted our audits 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 the financial statements are free of material
misstatement and whether effective internal control over
financial reporting was maintained in all material respects.
Our audits of the financial statements included
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the
overall financial statement presentation. Our audits of
internal control over financial reporting included
obtaining an understanding of internal control over
financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such
other procedures as we considered necessary in the
circumstances. We believe that our audits provide a
reasonable basis for our opinions.
A company’s internal control over financial reporting
is a process designed by, or under the supervision of, the
company’s principal executive and principal financial
officers, 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 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.
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