Aarons 2005 Annual Report Download - page 41

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39
Management Report
Management Report on Internal Control Over Financial Reporting
Management of Aaron Rents, Inc. (the “Company”) is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934, as amended.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. 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. Internal control over
financial reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations. Internal control over financial reporting is a process that
involves human diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also can be circumvented
by collusion or improper management override. Because of such limitations, there is a risk that
material misstatements may not be prevented or detected on a timely basis by internal control
over financial reporting. However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process safeguards to reduce,
though not eliminate, the risk.
The Company’smanagement assessed the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2005. In making this assessment, the Company’s
management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control — Integrated Framework.
Based on our assessment, management believes that, as of December 31, 2005, the
Company’s internal control over financial reporting is effective based on those criteria.
The Company’s independent auditor has issued an audit report on our assessment of the
Company’s internal control over financial reporting.
March 14, 2006
Note O: Subsequent Event (Unaudited)
On February 27, 2006, the Company entered into a
second amendment to the revolving credit agreement to
increase the maximum borrowing limit to $140.0 million
from $87.0 million and extend the expiration date to May 28,
2008. The franchise loan facility and guaranty was amended
to decrease the maximum commitment amount from $140.0
million to $115.0 million.
Notes to Consolidated Financial Statements