THE BOMBAY COMPANY, INC.
AMENDED AND RESTATED CHARTER OF THE
AUDIT AND FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS
(the “Charter”) shall define and govern the operations of the Audit and Finance
Committee (the “Committee”) of the Board of Directors (the “Board”) of The
Bombay Company, Inc., a Delaware corporation (the “Company”). The purpose of
this Charter is to guide the Committee in its efforts to assist the Board with
its oversight in the following areas:
- Monitoring the integrity of
the Company's financial statements.
- Monitoring the
qualifications, independence and performance of the Company's independent
- Monitoring the Company’s
compliance with legal and regulatory requirements.
- Overseeing the performance of
the Company’s internal audit function.
- Providing oversight of
significant matters relating to financing of the Company’s operations.
The Committee is empowered to investigate any
matter brought to its attention, with full access to all books, records,
facilities and personnel of the Company and, for this purpose, to retain on
behalf of the Committee outside counsel or other experts.
The Committee shall consist of three or more
directors all of whom in the judgment of the Board of Directors shall be
independent in accordance with the rules and regulations of the Securities and
Exchange Commission (“SEC”) and New York Stock Exchange (“NYSE”) listing
standards. Each member shall in the judgment of the Board of Directors have the
ability to read and understand the Company’s basic financial statements or
shall at the time of appointment undertake training for that purpose. At least
one member of the Committee shall in the judgment of the Board of Directors be
a financial expert in accordance with the rules and regulations of the SEC and
at least one member (who may also serve as the financial expert) shall in the
judgment of the Board of Directors have accounting or related financial
management expertise in accordance with the NYSE listing standards.
Members of the Committee shall be elected by
the Board at the annual meeting of the Board to serve until their successors
are duly elected and qualified. If a member is unable to serve a full term, the
Board shall elect a replacement. The Board shall appoint one of the members of
the Committee to be Committee Chairperson.
Amended and Restated Charter of the Audit and Finance Committee
The Committee shall meet at least four times
annually, and more frequently as circumstances dictate. Such meetings and
communications shall be either in person or by conference telephone call.
Minutes shall be prepared for each meeting of the Committee, which minutes
shall be submitted to the Committee for approval at a later meeting and then
submitted to the Board. The minutes of all meetings of the Committee shall be
sent to the Secretary of the Company for filing. The Committee shall meet
regularly in executive session without management present. In addition, the
Committee shall periodically meet with management, internal auditors and
outside auditors to oversee and review their respective performance.
The independent auditors shall be ultimately
accountable to the Committee and the Board. The Committee and the Board shall
have ultimate authority and responsibility to select, evaluate, and, where appropriate,
replace the independent auditors.
The responsibilities of the Committee are set
forth below. Management is responsible for preparing the Company's financial
statements and implementing internal controls. The independent auditors are
responsible for auditing the financial statements and assessing the
effectiveness of the internal controls where they deem necessary as part of the
audit process. The Committee’s job is one of oversight, and the review of the
financial statements by the Committee is not of the same quality as the audit
performed by the independent auditors. The Committee is not responsible for
providing any expert or special assurance as to the Company’s financial
statements or any professional certification as to the independent auditors’
work because management and the independent auditors spend more time preparing
and auditing the Company’s financial statements.
To fulfill its responsibilities, the Committee
- Appoint the independent
auditors for the purpose of preparing or issuing an audit report or to
perform related work and set their compensation.
- Pre-approve all audit and
permitted non-audit services to be performed by the independent auditors;
or delegate the authority to pre-approve such services to one or more
members of the Committee, who shall report any decision to pre-approve any
services to the full Committee at its regularly scheduled meetings.
- Report the pre-approval of
any permitted non-audit services to management for disclosure in the
Company’s periodic reports.
- Review with the independent
auditors for the Company, the scope of the prospective audit, the
estimated fees therefor and such other matters pertaining to such audit as
the Committee may deem appropriate.
- Receive and review a report
by the independent auditors describing (i) the independent auditors’
internal quality control procedures; (ii) 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 (iii) in an effort to assess the auditors’
independence, all relationships between the auditors and the Company.
- Review with the independent
auditors and management:
- proposed regulatory and
accounting pronouncements and their potential effects on the financial
- any correspondence with
regulators or governmental agencies that raise material issues regarding
the Company’s financial statements or accounting policies.
- Review with the independent
auditors any questions, comments or suggestions they may have relating to
the internal controls, accounting practices or procedures of the Company
or its subsidiaries, and any audit problems or difficulties and
- Following completion of work
on the annual audit, discuss with the independent auditors any weaknesses
disclosed in the normal course of the audit relating to internal controls,
accounting practices or procedures of the Company or its subsidiaries.
Discuss with the independent auditors and management the adequacy and
effectiveness of the Company’s systems of internal controls regarding
finance and accounting.
- Make or cause to be made,
from time to time, such other examinations or reviews as the Committee may
deem advisable with respect to the adequacy of the systems of internal
controls and accounting practices of the Company and its subsidiaries and
with respect to current accounting trends and developments, and take such
action with respect thereto as may be deemed appropriate.
- In accordance with Statement
on Auditing Standards No. 71, and considering Statement on Auditing
Standards No. 61, as amended (“SAS No. 61”) as it relates to interim
financial information, review and discuss the Company's quarterly
operating results with management and the independent auditors (i) the
Company’s quarterly financial results prior to the release of earnings and
(ii) the Company’s Quarterly Reports on Form 10-Q prior to the filing of
such reports with the SEC. The review and discussion shall occur prior to
the release of the Company’s operating results, which shall occur prior to
the filing of the Company's Quarterly Reports on Form 10-Q with the SEC.
The Chairperson of the Committee may represent the entire Committee for
purposes of this review.
- Prior to distribution, review
and discuss the annual audited financial statements of the Company,
including the Company’s disclosures under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” with
management and the independent auditors, with specific attention to those
matters required to be discussed by SAS No. 61.
- Based on the review and
discussions described above, determine whether to recommend to the Board
that the audited financial statements of the Company be included in the
Company's Annual Report on Form 10-K to be filed with the SEC.
- Review and discuss with the
independent auditors their judgment about the quality, not just the
acceptability, of the Company's accounting principles as applied in its
financial reporting. Management may be included in these discussions at
the discretion of the Committee.
- Review and discuss with the
independent auditors and management the extent to which changes in
financial or accounting practices, as approved by the Committee, have been
implemented, and plans for future implementation.
- Review earnings press
releases, as well as financial information and earnings guidance provided
to analysts and rating agencies and discuss Company policies with respect
to risk assessment and risk management.
- Receive the written
disclosures and the letter required by Independence Standards Board
Standard No. 1 from the independent auditors and discuss with them the
disclosures, the letter and their independence. Discuss with the
independent auditors any disclosed relationships or services that may
impact the objectivity and independence of the independent auditors.
Consider, as referenced in the SEC’s rules relating to proxy statement
disclosure, whether the provision of non-audit services by the independent
auditors is compatible with maintaining the independent auditors’
independence. Recommend, if appropriate, that the Board take appropriate
action in response to the independent auditors’ written disclosures to
satisfy itself of the independent auditors’ independence.
- Review the effectiveness of
the internal audit function, including the annual plan, activities and
organizational structure of the function. Review the results of the audits
performed. Review and concur in the appointment, replacement, reassignment
or dismissal of the director of the internal audit function.
- Discuss 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 the status of
compliance with laws, regulations, and internal procedures, contingent
liabilities and risks that may be material to the Company, the scope and
status of systems designed to assure Company compliance with laws,
regulations and internal procedures, through receiving reports from
management, legal counsel and other third parties as determined by the
Committee on such matters, as well as major legislative and regulatory
developments which could materially impact the Company’s contingent
liabilities and risks.
- Establish and maintain
procedures for the confidential and anonymous receipt, retention and
treatment of complaints regarding the Company’s accounting, internal
controls or auditing matters and establish clear hiring policies for
employees or former employees of the Company’s outside auditors.
- Confirm, at least annually,
that the members of the Committee continue to meet all NYSE requirements
- Confirm that the Company has
made to the NYSE all required affirmations regarding (i) the independence,
financial literacy and accounting or related financial management
expertise of the members of the Committee and (ii) the annual review and
reassessment of this Charter.
- Review the Company's cash
management program, including investment guidelines and management's
strategy related to the investment of the Company's cash.
- Review and approve the
Company's Capital Expenditure policy, including any proposed expenditure
exceeding the guidelines approved in the annual business plan.
- Review the terms and
conditions of all proposed credit arrangements, equity offerings, stock
distributions, stock splits, stock repurchases and other finance matters
prior to presentation to the Board for approval.
- Review compliance with the
Company's policies on leasing, disposal of fixed assets and consultant
- Ensure the rotation of the
lead partner every five years and other audit partners every seven years
and consider whether there should be regular rotation of the audit firm
- Set clear hiring policies for
employees or former employees of the independent auditors.
- Obtain the advice and
assistance, as appropriate, of independent counsel and other advisors as
necessary to fulfill the responsibilities of the Committee.
- Report regularly to the Board
of Directors as to the Committee’s accomplishments of its purposes and
responsibilities and prepare a Committee report as required by the SEC to
be included in the Company’s annual proxy statement.
- Review and assess the
adequacy of this Charter annually, recommending appropriate changes for
- Conduct an annual performance
evaluation of the Committee