Pepsi 2007 Annual Report Download - page 85

To Our Shareholders:
Our management is responsible for establishing
and maintaining adequate internal control over
fi nancial reporting, as such term is defi ned in
Rule 13a-15(f) of the Exchange Act. Under the
supervision and with the participation of our
management, including our Chief Executive
Offi cer and Chief Financial Offi cer, we
conducted an evaluation of the effectiveness
of our internal control over fi nancial report-
ing based upon the framework in Internal
Control — Integrated Framework issued by
the Committee of Sponsoring Organizations
of the Treadway Commission. Based on that
evaluation, our management concluded that
our internal control over fi nancial reporting is
effective as of December 29, 2007.
KPMG LLP, an independent registered
public accounting fi rm, has audited the
consolidated fi nancial statements included in
this Annual Report and, as part of their audit,
has issued their report, included herein, on
the effectiveness of our internal control over
fi nancial reporting.
During our fourth fi scal quarter of 2007, we
continued migrating certain of our fi nancial
processing systems to SAP software. This
software implementation is part of our
ongoing global business transformation initia-
tive, and we plan to continue implementing
such software throughout other parts of our
businesses over the course of the next few
years. In connection with the SAP implementa-
tion and resulting business process changes,
we continue to enhance the design and
documentation of our internal control
processes to ensure suitable controls over our
fi nancial reporting.
Except as described above, there were no
changes in our internal control over fi nancial
reporting that have materially affected, or
are reasonably likely to materially affect, our
internal control over fi nancial reporting during
our fourth fi scal quarter of 2007.
Management’s Responsibility for
Financial Reporting
To Our Shareholders:
At PepsiCo, our actions — the actions of all our associates — are governed by our Worldwide
Code of Conduct. This code is clearly aligned with our stated values — a commitment to sus-
tained growth, through empowered people, operating with responsibility and building trust. Both
the code and our core values enable us to operate with integrity — both within the letter and the
spirit of the law. Our code of conduct is reinforced consistently at all levels and in all countries.
We have maintained strong governance policies and practices for many years.
The management of PepsiCo is responsible for the objectivity and integrity of our consolidated
fi nancial statements. The Audit Committee of the Board of Directors has engaged independent
registered public accounting fi rm, KPMG LLP, to audit our consolidated fi nancial statements and
they have expressed an unqualifi ed opinion.
We are committed to providing timely, accurate and understandable information to investors.
Our commitment encompasses the following:
Maintaining strong controls over fi nancial reporting. Our system of internal control is based
on the control criteria framework of the Committee of Sponsoring Organizations of the Treadway
Commission published in their report titled Internal Control — Integrated Framework. The system
is designed to provide reasonable assurance that transactions are executed as authorized and
accurately recorded; that assets are safeguarded; and that accounting records are suffi ciently
reliable to permit the preparation of fi nancial statements that conform in all material respects
with accounting principles generally accepted in the U.S. We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in reports under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the
specifi ed time periods. We monitor these internal controls through self-assessments and an
ongoing program of internal audits. Our internal controls are reinforced through our Worldwide
Code of Conduct, which sets forth our commitment to conduct business with integrity, and
within both the letter and the spirit of the law.
Exerting rigorous oversight of the business. We continuously review our business results and
strategies. This encompasses fi nancial discipline in our strategic and daily business decisions. Our
Executive Committee is actively involved — from understanding strategies and alternatives to
reviewing key initiatives and fi nancial performance. The intent is to ensure we remain objective in
our assessments, constructively challenge our approach to potential business opportunities and
issues, and monitor results and controls.
Engaging strong and effective Corporate Governance from our Board of Directors. We
have an active, capable and diligent Board that meets the required standards for independence,
and we welcome the Board’s oversight as a representative of our shareholders. Our Audit
Committee is comprised of independent directors with the fi nancial literacy, knowledge and
experience to provide appropriate oversight. We review our critical accounting policies, fi nancial
reporting and internal control matters with them and encourage their direct communication
with KPMG LLP, with our General Auditor, and with our General Counsel. We also have a senior
compliance offi cer to lead and coordinate our compliance policies and practices.
Providing investors with fi nancial results that are complete, transparent and under-
standable. The consolidated fi nancial statements and fi nancial information included in this
report are the responsibility of management. This includes preparing the fi nancial statements in
accordance with accounting principles generally accepted in the U.S., which require estimates
based on management’s best judgment.
PepsiCo has a strong history of doing what’s right. We realize that great companies are
built on trust, strong ethical standards and principles. Our fi nancial results are delivered from
that culture of accountability, and we take responsibility for the quality and accuracy of our
fi nancial reporting.
Management’s
Report on Internal
Control over
Financial Reporting
Peter A. Bridgman
Senior Vice President and Controller
Indra K. Nooyi
Chairman of the Board of Directors and
Chief Executive Offi cer
Richard Goodman
Chief Financial Offi cer
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