Pottery Barn 2004 Annual Report Download - page 103

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• Appoint and/or replace the independent registered public accounting firm, pre-approve all audit and non-audit
services of the independent registered public accounting firm and assess its qualifications and independence;
• Review the performance of the company’s internal audit function, the company’s auditing, accounting
and financial reporting procedures, and the company’s independent registered public accounting firm;
• Monitor the company’s compliance with legal and regulatory requirements;
• Monitor the company’s system of internal controls and internal control over financial reporting; and
• Retain independent legal, accounting or other advisors when necessary and appropriate.
How did we perform our responsibilities in fiscal 2004?
The Audit Committee held a total of six meetings during fiscal 2004 and took the following actions, among other
things:
• Reviewed and discussed the company’s audited financial statements for fiscal 2004 with management and
Deloitte;
• Reviewed and discussed the company’s periodic filings on Forms 10-K and 10-Q with management and
Deloitte;
• Reviewed and discussed all company earnings, sales and guidance press releases with management;
• Reviewed and discussed the company’s internal control over financial reporting with management and
Deloitte;
• Met with Deloitte, with and without management present, to discuss the overall quality of the internal and
external audit process and the financial reporting process; and
• Discussed with Deloitte its independence from the company and management based on the following:
(i) our confirmation that no member of Deloitte’s audit team is or has been employed by the company in a
financial reporting oversight role; and (ii) our review of audit and non-audit fees and the written
disclosures and letter from Deloitte as required by Independence Standards Board Standard No. 1
(“Independence Discussions with Audit Committee”), as modified and supplemented.
What matters did we discuss with Deloitte?
During fiscal 2004, we discussed the following, among other things, with Deloitte:
• Deloitte’s responsibilities in connection with the audit of the company’s financial statements and matters
relating to Deloitte’s independence;
• The company’s internal control over financial reporting;
• Any significant issues arising during the audit and any other matters relating to the conduct of the audit of
the company’s financial statements; and
• Matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (“Communication
with Audit Committees”), as modified and supplemented, including the quality of the company’s
accounting principles, the soundness of significant judgments and the clarity of disclosures in the
company’s financial statements.
What is our policy regarding pre-approval of audit and non-audit services performed by Deloitte?
All services, whether audit or non-audit services, performed by Deloitte must be pre-approved by us or a
designated member of our committee, whose decisions must be reported to us at our next meeting. Pre-approval
must be obtained before Deloitte performs the services but cannot be obtained more than one year before
performance begins. Approval can be for general classes of permitted services such as “annual audit services” or
“tax consulting services.” A written engagement letter, including a description of the permitted services, the dates
of the engagement and the estimated fees for such services, must be approved by the committee in accordance
with these procedures before performance begins.
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