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assist in the company s management The report concluded that the company s secret, such as it was, boiled down to 30 years of aggressive yet conservative management in other words, bedrock values coupled with bold ventures, the very same equation Walgreens has relied on for over a century No sooner had the analysts from Davis and Company departed than the reporters from Fortune magazine arrived to produce the lead story for the September 1934 issue on the chain35 Titled, 500 Corner Drugstores, the piece extolled Walgreens merchandising prowess A druggist s technique nowadays is to put before you everything that you can conceivably need in your home, at a price calculated to attract you Walgreens decision to sell much more than drugs, which began when Charles first put together his display of pots and pans years earlier, had caught on Across the fountain [of the average Walgreens store] each year flow 455 gallons of chocolate [and] 45 gallons of vanilla syrup, the author said Tables for food service alone, the magazine reported, accounted for half the floor space in many stores Although the pharmacy department brought in a paltry 3 percent of profits, Charles remained committed to staffing a fullservice pharmacy in every store The Fortune staffers were smart enough to look beyond the soda fountains that hooked readers and customers alike Walgreens success, they said, was due in part to some very smart financial decisions that customers never see The once powerful Liggett chain and the United Drug network were in trouble, Fortune explained, because they had locked themselves into long-term leases in the 1920s that had become oppressive in the 1930s Walgreens executives, in contrast, signed much more favorable leases and only leased what they needed without taking on extra space they would then have to sublease to others, putting the onus on the chain Fortune gave particular credit to Robert Knight, whom it called the financial brain of the outfit, who had analyzed, trimmed, and coordinated Walgreens financial methods to weather the storm that broke in 1929 In.

Self-assessments Peer reviews Internal audits To evaluate operating effectiveness, further study and followup are needed when tolerances are exceeded Check the level of tolerances used Check the frequency of the analysis Review supporting documentation for: Evidence of follow-up action Corrective action, such as changes in policy Establish an audit committee Develop a whistleblower program Initiate an internal management control process Enhance financial disclosure as appropriate Develop a process for continuous evaluation of the internal control processes 2 Build in sustainability The criteria for ensuring sustainability include: Strong internal control process Continuous management support Continuous evaluation 3 Review 404 report results with the CFO and release the report The most effective implementation of a Sarbanes-Oxley compliance initiative will involve the COSO and COBIT frameworks, and a methodology such as SOCKET:

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1 COSO (Committee of Sponsoring Organizations, a group of professional auditing organizations) The SOCKET methodology has to be supplemented by the COSO Integrated Framework for achieving Sarbanes-Oxley compliance There are three main objectives for determining which internal controls are to be applied: 1 Efficiency and effectiveness of operations 2 Financial reporting reliability 3 Regulatory compliance

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other words, Mr Knight had done exactly what he d promised to do 10 years earlier after he finished his master s thesis For all these reasons, Fortune concluded, during the darkest days of the Depression, Walgreens sits at the top of the retail drug business

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