Pizza Hut 2005 Annual Report Download - page 47

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The฀Board฀of฀Directors฀and฀Shareholders
YUM!฀Brands,฀Inc.:
We฀have฀audited฀management’s฀assessment,฀included฀in฀the฀accompanying฀Management’s฀Report฀on฀Internal฀
Control฀over฀Financial฀Reporting,฀appearing฀on฀page฀53฀of฀the฀Company’s฀Annual฀Report฀for฀the฀fi฀scal฀year฀ended฀
December฀31,฀2005,฀that฀YUM!฀Brands,฀Inc.฀and฀Subsidiaries฀(“YUM”)฀maintained฀effective฀internal฀control฀
over฀fi฀nancial฀reporting฀as฀of฀December฀31,฀2005,฀based฀on฀criteria฀established฀in฀Internal฀Control—Integrated฀
Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀(COSO).฀YUM’s฀
management฀is฀responsible฀for฀maintaining฀effective฀internal฀control฀over฀fi฀nancial฀reporting฀and฀for฀its฀assess-
ment฀of฀the฀effectiveness฀of฀internal฀control฀over฀fi฀nancial฀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฀fi฀nan-
cial฀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฀fi฀nancial฀reporting฀was฀maintained฀in฀all฀material฀respects.฀Our฀audit฀included฀
obtaining฀an฀understanding฀of฀internal฀control฀over฀fi฀nancial฀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฀fi฀nancial฀reporting฀is฀a฀process฀designed฀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฀detection฀of฀unauthorized฀acquisition,฀use,฀or฀disposition฀of฀the฀company’s฀
assets฀that฀could฀have฀a฀material฀effect฀on฀the฀fi฀nancial฀statements.
Because฀of฀its฀inherent฀limitations,฀internal฀control฀over฀fi฀nancial฀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.
In฀our฀opinion,฀management’s฀assessment฀that฀YUM฀maintained฀effective฀internal฀control฀over฀fi฀nancial฀
reporting฀as฀of฀December฀31,฀2005,฀is฀fairly฀stated,฀in฀all฀material฀respects,฀based฀on฀criteria฀established฀in฀
Internal฀Control—Integrated฀Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀
Commission฀(COSO).฀Also,฀in฀our฀opinion,฀YUM฀maintained,฀in฀all฀material฀respects,฀effective฀internal฀control฀
over฀fi฀nancial฀reporting฀as฀of฀December฀31,฀2005,฀based฀on฀criteria฀established฀in฀Internal฀Control—Integrated฀
Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀(COSO).
We฀also฀have฀audited,฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀
(United฀States),฀the฀consolidated฀balance฀sheets฀of฀YUM฀as฀of฀December฀31,฀2005฀and฀December฀25,฀2004,฀and฀
the฀related฀consolidated฀statements฀of฀income,฀cash฀fl฀ows฀and฀shareholders’฀equity฀and฀comprehensive฀income฀
for฀each฀of฀the฀years฀in฀the฀three-year฀period฀ended฀December฀31,฀2005,฀and฀our฀report฀dated฀March฀2,฀2006,฀
expressed฀an฀unqualifi฀ed฀opinion฀on฀those฀consolidated฀fi฀nancial฀statements.
KPMG฀LLP
Louisville,฀Kentucky
March฀2,฀2006
Report฀of฀Independent฀Registered฀
Public฀Accounting฀Firm
Yum!฀Brands,฀Inc.฀ ฀ ฀ |฀ ฀ ฀ 51.