Pottery Barn 2005 Annual Report Download - page 121

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• 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 performed by Deloitte, whether audit or non-audit services, 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 Audit and Finance
Committee in accordance with these procedures before performance begins.
Did we review the fees billed by Deloitte for fiscal 2005?
Yes. We reviewed and discussed the fees billed by Deloitte for services in fiscal 2005, which are described in
detail below. We determined that the provision of non-audit services was compatible with Deloitte’s
independence.
Did we review the company’s audited financial statements for fiscal 2005?
Yes. We reviewed and discussed the company’s audited financial statements for fiscal 2005, and we
recommended to the Board that the company’s audited financial statements be included in the company’s Annual
Report on Form 10-K for fiscal 2005 for filing with the SEC.
Who prepared this report?
Members of the Audit and Finance Committee, Michael R. Lynch, Adrian T. Dillon and Jeanne P. Jackson,
prepared this report.
AUDIT AND RELATED FEES
During fiscal 2005 and 2004, Deloitte did not perform any prohibited non-audit services for us.
Audit Fees
Deloitte billed approximately $1,107,000 for fiscal 2005 and $1,141,000 for fiscal 2004 for professional services
to audit our consolidated financial statements included in our Annual Report on Form 10-K and to review our
condensed, consolidated financial statements included in our quarterly reports on Form 10-Q. Fees for audit
services billed also consisted of fees for the attestation of management’s assessment of internal control as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees
Deloitte billed approximately $22,800 for fiscal 2005 and $97,110 for fiscal 2004 for audit-related services.
Audit-related services included: (i) the audit of our 401(k) plan; (ii) consultation on various accounting matters;
(iii) consultation on our internal control; and (iv) assistance with our readiness under Section 404 of the
Sarbanes-Oxley Act of 2002.
Tax Fees
Deloitte billed a total of $141,225 for fiscal 2005 and $418,369 for fiscal 2004 for tax services. Tax services
included: (i) $24,000 for fiscal 2005 and $20,385 for fiscal 2004 for tax compliance services, which included
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