US Bank 2011 Annual Report Download - page 68

In assessing the fair value of reporting units, the
Company may consider the stage of the current business cycle
and potential changes in market conditions in estimating the
timing and extent of future cash flows. Also, management
often utilizes other information to validate the reasonableness
of its valuations, including public market comparables, and
multiples of recent mergers and acquisitions of similar
businesses. Valuation multiples may be based on revenue,
price-to-earnings and tangible capital ratios of comparable
public companies and business segments. These multiples may
be adjusted to consider competitive differences, including size,
operating leverage and other factors. The carrying amount of
a reporting unit is determined based on the capital required to
support the reporting unit’s activities, including its tangible
and intangible assets. The determination of a reporting unit’s
capital allocation requires management judgment and
considers many factors, including the regulatory capital
regulations and capital characteristics of comparable public
companies in relevant industry sectors. In certain
circumstances, management will engage a third party to
independently validate its assessment of the fair value of its
reporting units.
The Company’s annual assessment of potential goodwill
impairment was completed during the second quarter of 2011.
Based on the results of this assessment, no goodwill
impairment was recognized. Because of current economic
conditions the Company continues to monitor goodwill and
other intangible assets for impairment indicators throughout
the year. The Company does not expect recent legislation will
result in goodwill impairment.
Income Taxes The Company estimates income tax expense
based on amounts expected to be owed to various tax
jurisdictions. Currently, the Company files tax returns in
approximately 235 federal, state and local domestic
jurisdictions and 14 foreign jurisdictions. The estimated
income tax expense is reported in the Consolidated Statement
of Income. Accrued taxes represent the net estimated amount
due to or to be received from taxing jurisdictions either
currently or in the future and are reported in other assets or
other liabilities on the Consolidated Balance Sheet. In
estimating accrued taxes, the Company assesses the relative
merits and risks of the appropriate tax treatment considering
statutory, judicial and regulatory guidance in the context of
the tax position. Because of the complexity of tax laws and
regulations, interpretation can be difficult and subject to legal
judgment given specific facts and circumstances. It is possible
that others, given the same information, may at any point in
time reach different reasonable conclusions regarding the
estimated amounts of accrued taxes.
Changes in the estimate of accrued taxes occur
periodically due to changes in tax rates, interpretations of tax
laws, the status of examinations being conducted by various
taxing authorities, and newly enacted statutory, judicial and
regulatory guidance that impacts the relative merits and risks
of tax positions. These changes, when they occur, affect
accrued taxes and can be significant to the operating results of
the Company. Refer to Note 19 of the Notes to Consolidated
Financial Statements for additional information regarding
income taxes.
Controls and Procedures
Under the supervision and with the participation of the
Company’s management, including its principal executive
officer and principal financial officer, the Company has
evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange Act of
1934 (the “Exchange Act”)). Based upon this evaluation, the
principal executive officer and principal financial officer have
concluded that, as of the end of the period covered by this
report, the Company’s disclosure controls and procedures
were effective.
During the most recently completed fiscal quarter, there
was no change made in the Company’s internal controls over
financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The annual report of the Company’s management on
internal control over financial reporting is provided on
page 67. The attestation report of Ernst & Young LLP, the
Company’s independent accountants, regarding the
Company’s internal control over financial reporting is
provided on page 69.
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