LeapFrog 2004 Annual Report Download - page 132

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, and amended and restated in October 2002 to
include the expanded duties and responsibilities required of the Audit Committee pursuant to the NYSE listing
standards.
The Audit Committee consists of three directors, each of whom are independent directors in accordance
with the rules and regulations of the NYSE.
The responsibilities of the Audit Committee include recommending to the board an accounting firm to be
engaged as LeapFrog’s independent registered public accounting firm and pre-approving any non-audit services
provided by LeapFrog’s independent registered public accounting firm. Additionally, and as appropriate, the
Audit Committee reviews and evaluates, and discusses and consults with LeapFrog management, LeapFrog
internal audit personnel and the independent registered public accounting firm regarding the following:
• the plan for, and the independent registered public accounting firm’s 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.
Monitoring of Integrity of Financial Statements
The Audit Committee is responsible for recommending to the board of directors that LeapFrog’s financial
statements be included in LeapFrog’s quarterly and annual reports. In fulfilling this responsibility, prior to the
release of each of the company’s quarterly and annual financial results for 2004, the Audit Committee reviewed
the financial statements and met to discuss the financial statements with management and Ernst & Young LLP,
the company’s independent registered public accounting firm. At each of those meetings, management
represented to the Audit Committee that the company’s consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The Audit Committee discussed with management the
significant accounting policies utilized by the company, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements. At each of these meetings to review the quarterly and annual
financial results for 2004, the Audit Committee met separately with the independent registered public accounting
firm to review the results of its examination and the overall quality of the company’s financial and accounting
reporting. In relation to the audited consolidated financial statements for 2004, the Audit Committee reviewed
and discussed with Ernst & Young LLP the matters
(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 Securities Act of 1933 (the “1933 Act”) or
the Securities Exchange Act of 1934 Act (the “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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