Pottery Barn 2009 Annual Report Download - page 195

provided to investors. Such review may be done generally (consisting of discussing the types of
information to be disclosed and the types of presentations to be made).
• Review with management and the independent auditor the effect on the Company’s financial statements
of regulatory and accounting initiatives as well as off-balance sheet arrangements, contractual obligations
and contingent liabilities and commitments.
• Review with management the Company’s major financial risk exposures and the steps management has
taken to monitor and control such exposures, including the Company’s risk assessment and risk
management policies.
• Review with the independent auditor the matters required to be discussed by relevant PCAOB and SEC
requirements relating to the conduct of the audit, including any problems or difficulties encountered in the
course of the audit work and management’s response thereto, including any restrictions on the scope of
activities or access to requested information, and any significant disagreements with management.
• Review disclosures made to the Committee by the Company’s CEO and CFO during their certification
process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud involving management or other employees
who have a significant role in the Company’s internal controls.
Oversight of the Company’s Relationship with the Independent Auditor
• Review and evaluate the lead partner of the independent auditor team.
• Obtain and review a report from the independent auditor at least annually regarding (a) the independent
auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such issues, and (c) all relationships between the
independent auditor and the Company (for purposes of assessing the auditor’s independence). Evaluate
the qualifications, performance and independence of the independent auditor, including considering
whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is
compatible with maintaining the auditor’s independence, and taking into account the opinions of
management and internal auditors. The Committee shall present its conclusions with respect to the
independent auditor to the Board.
• Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit
and the audit partner responsible for reviewing the audit as required by law. Consider whether, in order to
assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent
auditing firm on a regular basis.
• Set clear policies for the Company’s hiring of employees or former employees of the independent auditor
who participated in any capacity in the audit of the Company.
• Consider discussing with the national office of the independent auditor material issues on which they
were consulted by the Company’s audit team and matters of audit quality and consistency.
• Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
Oversight of the Company’s Internal Audit Function
• Review the appointment and replacement of the senior internal auditing executive.
• Review the significant reports to management prepared by the internal auditing department and
management’s responses and subsequent follow-up on the responses.
E-3
Exhibits