Foot Locker 2008 Annual Report Download - page 83

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67
The Company’s processes, procedures and controls related to financial reporting were not effective
to ensure that amounts related to current taxes payable, certain deferred tax assets and liabilities, the
current and deferred income tax expense were recorded in accordance with generally accepted accounting
principles. Specifically, the Company did not maintain effective controls over the preparation and review of
the calculations and related supporting documentation for the tax accounts noted above. As a result, there
were errors in the aforementioned tax accounts in the preliminary consolidated financial statements that
were corrected prior to issuance of the Company’s consolidated financial statements.
KPMG LLP, the independent registered public accounting firm that audits the Company’s consolidated
financial statements included in this annual report, has issued an attestation report on the Company’s
effectiveness of internal control over financial reporting, which is included in Item 9A(e).
(c) Changes in Internal Control over Financial Reporting.
During the Company’s last fiscal quarter there were no changes in internal control over financial reporting
that materially affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
(d) Remediation Plan for Material Weakness in Internal Control Over Financial Reporting.
In response to the identified material weaknesses, management has identified several enhancements to the
Company’s internal control over financial reporting to remediate the material weakness described above.
These ongoing efforts include the following:
• Enhancing procedures for quality review and analysis of the provision for income tax.
• Accelerating certain year end tax analysis and reporting activities to periods earlier in the year
in order to provide additional analysis and reconciliation time.
• Identifying opportunities to automate the tax provision process including software tools that
would reduce the number of manual spreadsheets that are used to calculate the income tax
provision on a quarterly and annual basis.
• Evaluating the need for additional resources in the preparation and review of the provision of
income taxes.
We anticipate the actions described above and resulting improvements in controls will strengthen our
internal control over financial reporting and will, over time, address the related material weakness that
we identified as of January 31, 2009. However, because the remedial actions relate to the training of
personnel and many of the controls in our system of internal controls rely extensively on manual review and
approval, the successful operations of these controls, for at least several quarters, may be required prior to
management being able to conclude that the material weakness has been remediated.
(e) Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting