CompUSA 2007 Annual Report Download - page 72

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Item 8. Financial Statements and Supplementary Data.
The information required by Item 8 of Part II is incorporated herein by reference to the Consolidated
Financial Statements filed with this report; see Item 15 of Part IV.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the
Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation
of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as
of December 31, 2007. As part of this evaluation we identified a significant deficiency, as defined under
Auditing Standard No. 5: An Audit of Internal Control Over Financial Reporting That is Integrated With
an Audit of Financial Statements, in our internal controls over financial reporting as of December 31,
2007. This significant deficiency is:
The Company consolidates its worldwide financial results from disparate underlying financial and
operational systems that have various functional limitations and few automated interfaces. This results in
a consolidation process that is heavily reliant on manual review procedures and manual adjustments. Our
control over this consolidation process primarily consists of corporate review procedures. The design and
operation of this control process may not prevent or detect misstatements on a timely basis. This
significant deficiency does not, in our judgment, rise to the level of a material weakness in internal
controls over financial reporting because we believe that the controls in place would prevent or detect a
material misstatement. Based upon this evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.
Inherent Limitations of Internal Controls
Our internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control over financial reporting
includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our management and
directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of our assets that could have a material effect on our financial statements.
Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our
internal controls will prevent or detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness