Case Study

ACC511 Case Study 2

Corporate Governance

Lowe’s 2012 Annual Report/10K for the period ending February 1st, 2013

Date: 3-10-14

Spiros Kakos

Ben Mueller

Chris Pepoy

After number of major corporate and accounting scandals including Enron, WorldCom and Tyco International, Congress enacted The Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud. The two key provisions of the Sarbanes-Oxley Act are a requirement that management and auditors establish internal controls and reporting methods on the adequacy of those controls and a mandate that requires senior management to certify the accuracy of the reported financial statement.

In publicly traded companies, an audit committee is an operating committee of the board of directors charged with oversight of financial reporting and disclosure. Audit Committee typically approves selection of the external auditor. The external auditor, usually an outside accounting firm, reviews the entity's financial statements quarterly and issues an opinion on the accuracy of the entity's annual financial statements. Changing an external auditor typically also requires audit committee approval. Audit committees also help ensure the external auditor is independent, meaning no conflicts of interest exist that might interfere with the auditor's ability to issue its opinion on the financial statements.

Lowes’s Companies Inc’s. 2012 annual report, Deloitte & Touche LLP has audited the company’s consolidated balance sheets, statement of earnings, comprehensive income, shareholder’s equity, and cash flows for the period ended February 1, 2013. The financial statement schedule is the responsibility of the company’s management. Deloitte & Touche LLP is responsible to express an opinion of the financial statement and financial statements schedules. It is auditor’s opinion that the financial statements and financial position of...