Foot Locker 2009 Annual Report Download - page 83

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements between the Company and its independent registered public accounting firm
on matters of accounting principles or practices.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
The Company’s management performed an evaluation under the supervision and with the participation
of the Company’s Chief Executive Officer (‘‘CEO’’) and Chief Financial Officer (‘‘CFO’’), and completed an
evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and
procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the ‘‘Exchange Act’’)) as of January 30, 2010. Based on that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were
effective to ensure that information relating to the Company that is required to be disclosed in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC rules and form, and is accumulated and communicated to
management, including the CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure.
(b) Management’s Annual Report on Internal Control over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal control
over financial reporting (as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The
Company’s internal control system 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 U.S. generally accepted accounting principles. Because of 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.
As of January 31, 2009, management identified a material weakness pertaining to our internal control
over financial reporting. Management developed a remediation plan to strengthen our internal control
over financial reporting relating to accounting for income taxes. A remediation plan was implemented
during 2009 to remediate the material weakness, which included the following actions:
• We improved the documentation of the income tax provision process and instituted a more
formalized review process.
• We accelerated the timing of certain tax preparation and review activities during the
financial statement closing.
• We automated many parts of the income tax provision process thereby eliminating various
manual spreadsheets. Additionally, we implemented a software tool to assist in the
calculation of the consolidated income tax provision.
• We hired various tax professionals who are experienced in accounting for income taxes.
To evaluate the effectiveness of the Company’s internal control over financial reporting, the Company
uses the framework in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the ‘‘COSO Framework’’). Using the COSO
Framework, the Company’s management, including the CEO and CFO, evaluated the Company’s internal
control over financial reporting and concluded that the Company’s internal control over financial
reporting was effective as of January 30, 2010.
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(d).
(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 are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
(d) Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
65