Barnes and Noble 2013 Annual Report Download - page 78

To The Board of Directors and Stockholders of
Barnes & Noble, Inc.
We have audited Barnes & Noble, Inc.’s (the “Company”)
internal control over financial reporting as of April 27,
2013, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (1992
Framework ) (the COSO criteria). Barnes & Noble, Inc.’s
management is responsible for maintaining effective inter-
nal control over financial reporting, and for its assessment of
the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Annual Report
on Internal Control over Financial Reporting. Our respon-
sibility is to express an opinion on the Company’s internal
control over financial 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 financial reporting was main-
tained in all material respects. Our audit included obtaining
an understanding of internal control over financial report-
ing, assessing the risk that a material weakness exists, test-
ing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reason-
able basis for our opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regard-
ing 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 trans-
actions 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 autho-
rizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or dis-
position of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over
financial 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.
A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material
misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely
basis. The following material weakness has been identified
and included in management’s assessment. Management
has identified a material weakness in controls related to
the Company’s review and reconciliation of distribution
center accruals. We also have audited, in accordance with
the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheet of
Barnes & Noble, Inc. as of April 27, 2013, and the related
consolidated statements of operations,comprehensive
income (loss), changes in shareholders’ equity and cash
flows for the year then ended. This material weakness was
considered in determining the nature, timing and extent
of audit tests applied in our audit of the 2013 consolidated
financial statements, and this report does not affect our
report dated July 26, 2013, which expressed an unqualified
opinion on those financial statements.
In our opinion, because of the effect of the material weak-
ness described above on the achievement of the objectives
of the control criteria, Barnes & Noble, Inc. has not main-
tained effective internal control over financial reporting as
of April 27, 2013, based on the COSO criteria.
ERNST & YOUNG, LLP
New York, New York
July 26, 2013
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
76 Barnes & Noble, Inc.