This excerpt taken from the SBUX 10-K filed Dec 14, 2006.
Failure of the Companys internal control over financial reporting could harm its business and financial results.
The management of Starbucks is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect the Companys transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of the financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of the Company assets that could have a material effect on the financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the Companys financial statements would be prevented or detected. The Companys rapid growth and entry into new, globally dispersed markets will place significant additional pressure on the Companys system of internal control over financial reporting. Any failure to maintain an effective system of internal control over financial reporting could limit the Companys ability to report its financial results accurately and timely or to detect and prevent fraud.