Pepsico Policies And Procedures

PepsiCo’s mission is to be the world’s premier consumer products company focused on convenient foods and beverages. PepsiCo seeks to produce financial rewards to investors as they provide opportunities for growth for employees, business partners and the communities in which they operate, and everything they do to strive for honesty, fairness, and integrity. “PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate-environment, social, economic - creating a better tomorrow than today. ”

PepsiCo’s system of internal control is designed to provide reasonable assurance that transactions are executed as authorized and accurately recorded; that assts are safeguarded; and that accounting records are sufficiently reliable to permit the preparation of financial statements that conform in all material respects with accounting principles generally accepted in the U. S. PepsiCo maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports under the Securities Exchange Act of 1934.

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The internal controls are monitored through self-assessments and an ongoing program of internal audits. Their internal controls are also reinforced through the Worldwide Code of Conduct, which sets forth their commitment to conduct business with integrity, and within both the letter and the spirit of the law. PepsiCo is dependent on information technology as an enabler to improve the effectiveness of operations and to interface with customers as well as to maintain financial accuracy and efficiency.

If PepsiCo does not allocated and effectively manage the resources necessary to build and sustain the proper technology infrastructure, there could be transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss or damage to intellectual property through security breach. In addition, PepsiCo has outsourced certain information technology support services and administrative functions, such as payroll processing and benefit plan administration, to third-party service providers, and may outsource other functions in the future to achieve cost savings and efficiencies.

PepsiCo’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of management, including the CEO and CFO an evaluation of the effectiveness of their internal control over financial reporting. Management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows. PepsiCo leverage an integrated risk management framework to identify, assess, prioritize, manage, monitor and communicate risks across the Company.

This framework includes:

• The PepsiCo Risk Committee (PRC), comprised of a cross-functional, geographically diverse, senior management group, which meets regularly to identify, assess, prioritize and address strategic and reputation risks;
• Division Risk Committee (DRC), comprised of cross -functional senior management teams which meet regularly to identify, assess, prioritize and address division-specific operating risks;
• PepsiCo’s Risk Management Office, which manages the risk management process, provides ongoing guidance, tools and analytical support to the PRC and the DRC’s, identifies and assesses potential risks, and facilitates ongoing communication between the parties, as well as to PepsiCo’s Audit Committee and Board of Directors;
• PepsiCo Corporate Audit, which evaluates the ongoing effectiveness of our key internal controls through periodic audit and review procedures
• PepsiCo Compliance Department, which leads and coordinates our compliance policies and practices.

Management concluded that the internal control over financial reporting as of December 26, 2009 had no changes in internal control over financial reporting have materially affected, or are reasonably likely to materially affect. The Audit Committee of the Board of Directors hired an independent public accounting firm, KPMG LLP, to audit PepsiCo’s internal control over financial reporting, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

PepsiCo’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting. The Auditors responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on their audits.

The audit or internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The Audits also included performing such other procedures as considered necessary in certain circumstances.

A company’s internal control over financial reporting included the policies and procedures that  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and depositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and  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.  Internal control over financial reporting may not prevent or detect misstatements. Also, 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.

The Auditors concluded that PepsiCo maintained, all material respects, effective internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework issued by COSO. (Report of Independent Registered Public Accounting Firm) PepsiCo has embarked on a multi-year business transformation that includes the delivery of an SAP enterprise resource planning application as well as the migration to common business processes across their operations. This software implementation is part of our ongoing global business transformation, and plan to continue implementing such software throughout other parts of our business over the course of the next few years.

In connection with the SAP implementation and resulting business process changes, PepsiCo continues to enhance the design and documentation of internal control processes to ensure suitable controls over its financial reporting. There is of certainty that these programs will deliver the expected benefits. The failure to deliver their goals may impact the ability to  process transactions accurately and efficiently and remain in step with the changing needs of the trade, which could result in the loss of customers. In addition, the failure to either deliver the application on time, or anticipate the necessary readiness and training needs, could lead to business disruption and loss of customers and revenue.