PURPOSE
The audit committee shall assist the board of
directors in fulfilling its oversight responsibilities for the integrity
of the Company’s financial statements, the Company’s compliance
with legal and regulatory requirements, the independent auditor’s
qualifications and independence, and the performance of the Company’s
internal audit function and independent auditor.
PURPOSE (cont.)
In performing its oversight role, the committee is specifically empowered to investigate any matter it deems necessary with full access to all books, records, facilities, and personnel of the Company and is specifically authorized to engage and obligate the Company to compensate independent counsel and other advisors as it deems necessary.
COMPOSITION
The audit committee shall be composed of at least three members, each of whom shall be independent under all applicable laws and regulations. Each member of the audit committee shall be able to read and understand fundamental financial statements at the time of his or her appointment to the audit committee. At least one member of the audit committee shall have had past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background.
The audit committee shall be appointed by the Company’s board of directors and the board of directors may at any time, in its complete discretion, remove any member of the audit committee and may fill any vacancy on the audit committee. The audit committee chair shall be designated by the board of directors.
MEETINGS
The audit committee shall meet at least four times a year, with authority to convene additional meetings as it determines necessary. Each committee member is expected to attend each meeting, in person or via telephone or video conference. The committee shall invite members of management, the independent auditor or others to attend meetings and provide pertinent information as it deems necessary. The audit committee shall also meet separately with management and with the independent auditor as it deems necessary.
The audit committee shall have meeting agendas prepared at the direction of the audit committee chair and provided in advance to the members of the audit committee along with appropriate briefing materials. Minutes of each meeting of the audit committee shall be prepared, approved by the audit committee and presented by the audit committee to the board of directors. Necessary and appropriate administrative expenses of the audit committee shall be paid by the Company.
Except where the audit committee as a whole is required by applicable law or regulation to conduct certain activities, the audit committee may delegate activities to one or more of its members; however, the member or members shall be required to report on any such activities at a meeting of the entire audit committee.
RESPONSIBILITIES
The audit committee shall carry out the identified responsibilities in each of the following areas:
Independent Auditor
The audit committee shall:
be directly responsible for the appointment and termination, compensation,
and oversight of the independent auditor, including resolving disagreements
between management and the independent auditor regarding financial
reporting;
preapprove all audit and any nonaudit services provided by the independent
auditor and shall ensure that the Company does not engage the independent
auditor to perform any nonaudit services that are proscribed by law
or regulation;
at least annually, obtain and review a report by the independent auditor
describing that firm’s internal quality control procedures;
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 that
firm and any steps taken to deal with any such issues; and all relationships
between the independent auditor and the Company;
ensure the rotation of the lead audit partner as required by applicable
law and regulation and consider whether there should be regular rotation
of the audit firm itself; and
set clear hiring policies for employees or former employees of the
independent auditor.
Internal Audit and Control
The audit committee shall:
oversee the effectiveness of the Company’s internal control
system including information, technology, security and control;
understand the scope of the internal and independent auditor’s
review of internal control over financial reporting and obtain reports
on significant findings and recommendations together with management’s
responses; and
review with management the plans, activities, staffing, and organizational
structure of the internal audit and review the effectiveness of the
internal audit function.
Financial Statements and Periodic Reports
The audit committee shall:
review significant accounting and reporting issues and understand
their impact on the financial statements, including: -- complex or
unusual transactions and highly judgmental areas;
-- major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company’s
selection or application of accounting principles; and
-- the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the Company.
review analyses prepared by management and the independent auditor
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial statements,
including analysis of the effects of alternative GAAP methods on the
financial statements;
review with management and the independent auditor the results of
the audit, including any difficulties encountered by the independent
auditor, any restrictions on the scope of the independent auditor’s
activities or on access to requested information, and any significant
disagreements with management;
review and discuss the annual audited financial statements and quarterly
financial statements with management and the independent auditor,
including the Company’s disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
or any similar item in the Company’s periodic reports;
review disclosures made by the CEO and CFO in connection with their
certifications of annual and quarterly periodic reports about deficiencies
in the design or operation of internal controls or any fraud that
involves management or other employees who have a significant role
in the Company’s internal controls;
review and discuss all earnings, press releases, as well as financial
information and earning guidance provided to analysts and rating agencies
and
prepare and sign the report that is required to be included in the
Company’s annual proxy statement.
Compliance and Additional Duties
The audit committee shall:
review the effectiveness of the Company’s system for monitoring
compliance with applicable laws and regulations and the results of
management’s investigative follow-up, including any disciplinary
action, of any instances of non-compliance;
establish procedures for:
-- the receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting controls, or
auditing matters; and
-- confidential anonymous submission by Company employees of concerns
regarding questionable accounting or auditing matters.
adopt a formal document retention policy with respect to the performance
by the audit committee of its duties in general and including in particular
the protection of documents related to whistleblower complaints and
to the audit processes of the Company;
review the findings of any examinations of the Company by regulatory
agencies;
review and assess the adequacy of the audit committee charter annually,
recommending changes to the board of directors as appropriate;
confirm annually that the audit committee has performed all of its
assigned responsibilities; and
evaluate the performance of the committee and of each individual member
at least annually and present the results of that evaluation to the
board of directors.
ADOPTED
July 25, 2003
