Pursuant to Securities Exchange Act of 1934
Form 10-K & Schedule 14A Proxy Statement
BUS 500A Accounting Fundamentals
Professor Dennis Kyte
February 19, 2012
I. Background Information
Name of the Company: The Hershey Company. See SEC Form 10K, front page 0. Hereinafter. “Hershey.” or the “Company.” See Proxy Statement, page 2.
Fiscal year covered by the annual report: Fiscal year 2009. See SEC Form 10K, front page 0.
Stock Exchange where shares are traded and stock ticker symbol: New York Atock Exchange under ticker symbol HSY. See SEC Form 10K, page 16.
State of Incorporation: Delaware. See SEC Form 10K, page 1.
Describe the Company’s business(es), e.g. types of products manufactured: The Hershey Company sells quality chocolate and is the global leader in chocolate and sugar confectionery. Principal product groups include chocolate and confectionary products; snack products, gum and mint refreshment products; and pantry items, such as baking ingredients, toppings and beverages, See SEC Form 10K, page 1.
II. Management and Audit Report
Who are the Company’s Auditors? KMPG LLP. See Proxy Statement, page 35.
What opinion did the auditors issue? KMPG opinion says the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Hershey Company and subsidiaries as of December 31, 2009 and 2008 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. See SEC Form 10K, page 52.
In addition KMPG opinion is that the Company maintained effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. See SEC Form 10K, page 100.
Did the auditors examine all the evidence supporting the amounts and disclosures in all of the financial statements? Yes. The auditors examined the consolidated balance sheets of the Hershey Company, their subsidiaries, and related consolidated statements of income, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2009, all of which were included in The Hershey Company’s Annual Report on Form 10-K. See SEC Form 10K, page 110.
What is the auditors’s responsibility for the financial statements? The auditor’s responsibility is to obtain reasonable assurance about whether the financial statements are free of material misstatement. The audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. See SEC Form 10K, page 52.
The auditor’s responsibility is also to express an opinion on the Company’s internal control over financial reporting based on their audit. See SEC Form 10K, page 100.
What is the management’s responsibility? Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. See SEC Form 10K, page 100.
Under the Sarbanes-Oxley Act of 2002, reports on internal control are required. Did the company’s management acknowledge its responsibility for establishing and maintaining adequate internal control over financial reporting? Yes. The company’s management has acknowledged its responsibility for establishing and maintaining adequate internal control over financial reporting. See SEC Form 10K, page 99.
What is the auditor’s opinion on the effectiveness of the Company’s internal controls? It is the auditors...