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Exhibit 10.1
MCNAUGHTON APPAREL GROUP INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the compliance
by the Company with legal and regulatory requirements and (3) the independence
and performance of the Company's internal and external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq Stock Market, Inc. The members of the Audit Committee
shall be appointed by the Board.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles
and practices, as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
3. Review an analysis prepared by the independent auditor of significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
5. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
6. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor, any
internal auditors or management.
7. Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and the
Board.
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8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so
determined by the Audit Committee, take or recommend that the full
Board take appropriate action to oversee the independence of the
auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that
the Board replace the independent auditor.
11. Review the appointment and replacement of any senior internal auditing
executive.
12. Review the significant reports to management prepared by any internal
auditing department and management's responses.
13. Meet with the independent auditor prior to the audit to review the
scope and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
15. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company's
subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's code of conduct.
16. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access
to required information.
b. Any changes required in the planned scope of the internal audit.
18. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's code of conduct.
20. Review with the Company's legal counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from
regulators or governmental agencies.
21. Meet at least annually with the chief financial officer, any senior
internal auditing executive and the independent auditor in separate
executive sessions.
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While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty or responsibility of the Audit Committee to plan or
conduct audits or to determine that the Company's annual, quarterly and other
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent auditor. It is also not the duty or
responsibility of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's code of conduct.
