LeapFrog 2003 Annual Report Download - page 120

REPORT OF THE AUDIT COMMITTEE(1)
The Audit Committee of the board of directors is responsible for providing independent, objective oversight
of LeapFrog’s accounting functions and internal controls. The Audit Committee acts under a written charter first
adopted and approved by the board of directors in May 2002.
The Audit Committee consists of three directors, each of whom are independent directors in accordance
with the rules and regulations of the New York Stock Exchange.
The responsibilities of the Audit Committee include recommending to the board an accounting firm to be
engaged as LeapFrog’s independent auditors and pre-approving any non-audit services provided by LeapFrog’s
independent auditors. Additionally, and as appropriate, the Audit Committee reviews and evaluates, and
discusses and consults with LeapFrog management, LeapFrog internal audit personnel, and the independent
auditors regarding the following:
•the plan for, and the independent auditors’ report on, each audit of LeapFrog’s consolidated financial
statements;
•LeapFrog’s financial disclosure documents, including all financial statements, and reports filed with the
SEC or sent to stockholders;
•changes in LeapFrog’s accounting practices, principles, controls or methodologies, or in LeapFrog’s
financial statements;
•significant developments in accounting rules;
•the adequacy of LeapFrog’s internal accounting controls, and accounting, financial and auditing
personnel; and
•the establishment and maintenance of an environment at LeapFrog that promotes ethical behavior.
The Audit Committee is responsible for recommending to the board of directors that LeapFrog’s financial
statements be included in LeapFrog’s annual report. The Audit Committee took a number of steps in making this
recommendation for 2003. First, the Audit Committee discussed with Ernst & Young LLP, LeapFrog’s
independent auditors for 2003, those matters Ernst & Young communicated to and discussed with the Audit
Committee under applicable auditing standards, including information regarding the scope and results of the
audit. These communications and discussions are intended to assist the Audit Committee in overseeing the
financial reporting and disclosure process.
Second, Ernst & Young provided to the Audit Committee the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with Ernst & Young the firm’s independence.
Finally, the Audit Committee has reviewed and discussed the audited consolidated financial statements for
2003 with management and with the independent auditors. Specifically, the Audit Committee has discussed with
the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61,
“Codification of Statements on Auditing Standards, United States Auditing Standards Section 380,” as amended
by Statement on Auditing Standards No. 90 “Audit Committee Communications,” which includes, among other
things:
•methods used to account for significant unusual transactions;
(1) The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be
incorporated by reference into any filing of LeapFrog under the 1933 Act or 1934 Act, whether made before
or after the date hereof and irrespective of any general incorporation language contained in such filing.
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