Sunoco 2010 Annual Report Download - page 119

about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing 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 reasonable basis for our opinion.
A company’s internal control over financial reporting is a process 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. 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 transactions 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 authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition 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 identified control deficiencies that,
in the aggregate, represent a material weakness in the design and operation of its internal controls over the
computation of the income tax provision and determination of the appropriate classification of income taxes
payable and deferred income taxes. We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance sheets of Sunoco, Inc. and
subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations,
comprehensive income and equity and cash flows for each of the three years in the period ended December 31,
2010. This material weakness was considered in determining the nature, timing and extent of audit tests applied
in our audit of the 2010 consolidated financial statements and this report does not affect our report dated
February 28, 2011, which expressed an unqualified opinion on those consolidated financial statements.
In our opinion, because of the effect of the material weakness described above on the achievement of the
objectives of the control criteria, Sunoco, Inc. and subsidiaries have not maintained effective internal control over
financial reporting as of December 31, 2010, based on the COSO criteria.
Philadelphia, Pennsylvania
February 28, 2011
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