Pep Boys 2006 Annual Report Download - page 113

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74
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
Disclosure Controls and Procedures The Company’s management evaluated, with the participation of
its principal executive officer and principal financial officer, the effectiveness of its disclosure controls and
procedures as of the end of the period covered by this report. Disclosure controls and procedures mean the
Company’s controls and other procedures that are designed to ensure that information required to be
disclosed by the Company in its reports that the Company files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in its reports that
the Company communicated to its management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s
management recognizes that any controls and procedures, no matter how well designed and operated, can
only provide reasonable assurance of achieving their objectives and management necessarily applies its
judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon the
evaluation of the Company’s disclosure controls and procedures, as of the end of the period covered by this
report, the Company’s principal executive officer and principal financial officer concluded that, as of such
date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
The Company made a change to its internal control over financial reporting during the quarter ended
February 3, 2007 that have materially affected the Company’s internal control over financial reporting as
described below.
Through fiscal 2005, actual gross profit from merchandise sales was determined once a year following
a physical inventory count taken the last day of the fiscal year. In the fourth quarter of fiscal 2006, the
Company introduced a new process for counting its inventory, whereby physical counts were taken
throughout the fourth quarter and an estimate for inventory shrinkage was recorded for the period
between the actual physical count date and fiscal year end. Other than this change, the Company made no
other changes to its internal controls over financial reporting for the quarter ended February 3, 2007.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management of The Pep Boys-Manny, Moe and Jack (the Company) is responsible for establishing
and maintaining adequate internal control over financial reporting. The Company’s internal control over
financial reporting is a process designed under the supervision of the Company’s principal executive officer
and principal financial officer to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of the Company’s 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 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.