Audit Committee Charter
Purpose
The purpose of the Audit Committee is to assist the Board of Directors (the “Board”) in fulfilling its oversight responsibilities relating to the Corporation’s (1) financial statements and auditing, accounting and related reporting processes and (2) systems of internal controls regarding finance, accounting, financial reporting, and business practices and conduct established by management and the Board.
Membership and Procedures
Membership and Appointment. The Committee shall consist of at least three members of the Board, with the exact number being determined by the Board. The members of the Committee shall be appointed and replaced from time to time by the Board. Independence and Qualifications. Each member of the Committee shall meet the independence and experience requirements of the applicable provisions of federal law and the rules and regulations promulgated thereunder and the applicable rules of The Nasdaq Stock Market.
Resources. The Committee shall have the authority to retain, at the Company’s expense, special legal, accounting or other consultants to advise the Committee and to authorize or conduct investigations into any matters within the scope of its responsibilities. The Committee shall have sole authority to approve related fees and retention terms. The Committee may request any officer or employee of the Corporation or the Corporation’s outside counsel or independent auditors to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee, and shall have full access to all books, records, facilities and personnel of the Corporation in connection with the discharge of its responsibilities.
Evaluation. The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board.
Duties and Responsibilities
The following shall be the common recurring activities and responsibilities of the Committee in carrying out its oversight functions. These activities and responsibilities are set forth below as a guide to the Committee with the understanding that the Committee may alter or supplement them as appropriate under the circumstances to the extent permitted by applicable law, regulation or listing standard:
Documents/Reports Review
- Review and discuss the Corporation’s annual audited financial statements
and quarterly financial statements with management and the independent auditors,
including the Corporation’s disclosures under the section entitled "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" in
the Corporation’s reports filed with the Securities and Exchange Commission
and, with respect to the annual financial statements, the appropriateness
and quality of accounting and auditing principles and practices as well as
the adequacy of internal controls that could significantly affect the Corporation’s
financial statements.
- Review and discuss with management and the independent auditors the
Corporation’s
earnings press releases before they are issued, and discuss generally
with management the nature of any additional financial information or
earnings guidance to be provided publicly and/or to ratings agencies.
- Review and discuss with management and the independent auditors the matters
required to be discussed by Statement on Auditing Standards Nos. 61 and
90 (Communications with Audit Committees), as they may be modified or supplemented,
relating to the conduct of the audit, other significant financial reporting
issues and judgments made in connection with the preparation of the Corporation’s
financial statements, and any other matters communicated to the Committee
by the independent auditors.
- Review with management and such outside professionals as the Committee
considers appropriate important trends and developments in financial reporting
practices and requirements and their effect on the Corporation’s financial
statements.
- Based on its review and discussions with management and the independent
auditors, recommend to the Board whether the Corporation’s audited financial statements
should be included in the Corporation’s Annual Report on Form 10-K.
- Prepare the report of the Audit Committee required by the rules of the Securities and Exchange Commission to be included in the Corporation’s annual proxy statement.
Accounting and Financial Controls Framework
- Review major changes to the Corporation’s auditing and accounting
principles and practices as suggested by the independent auditors or management.
- Review and discuss with management and the independent auditors the
adequacy and effectiveness of the Corporation’s internal controls (including
any significant deficiencies, material weaknesses and significant changes
in internal controls reported to the Committee by management and any fraud
involving management or other employees who have a significant role in the
Corporation’s internal controls) and the effectiveness of the Corporation’s
disclosure controls and procedures.
- Review with the independent auditors any management letter provided by
the independent auditors and the Corporation’s responses to that letter.
- Review and discuss with management and the independent auditors (i) any
material financial or non-financial arrangements that do not appear
on the Corporation’s financial statements, (ii) any transactions or
courses of dealing with parties related to the Corporation that are significant
in size or involve terms or other aspects that differ from those that
would likely be negotiated with independent parties, and that are relevant
to an understanding of the Corporation’s financial statements, and
(iii) material financial risks that are designated as such by management
or the independent auditors.
- Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and the confidential, anonymous submission by the Corporation’s employees of concerns regarding accounting or auditing matters.
Independent Auditors
- Be directly responsible for the appointment, removal, compensation
and oversight of the work of the independent auditors (including
the resolution of disagreements between the Corporation’s management
and the independent auditors regarding financial reporting) for
the purpose of preparing or issuing an audit report or related work,
with the independent auditors reporting directly to the Committee.
- Have the sole authority to review in advance, and grant any appropriate
pre-approvals of all auditing services to be provided by the independent
auditors and all permitted non-audit services (including the fees and
other terms of engagement), and, if desired, establish policies and procedures
for review and pre-approval by the Committee of such services.
- Obtain, review and discuss with the independent auditors at least annually
a report by the independent auditors describing (i) the independent
auditors’ internal
quality-control procedures, and (ii) any material issues
raised by the most recent internal quality control review or peer
review of the independent auditors, 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 independent auditors, and the steps taken to deal with those
issues.
- Review the report by the independent auditors, which is required by Section
10A of the Securities Exchange Act of 1934, concerning:
(i) all critical accounting policies and practices to be used; (ii) alternative
treatments of financial information within GAAP that have been
discussed with management officials, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditors; and (iii) any other material written communications
between the independent auditors and the Corporation’s management.
- Review and discuss with the independent auditors, on an annual basis,
all relationships the independent auditors have with the
Corporation in order to evaluate the independent auditors’ continued independence,
and receive from the independent auditors on an annual basis a written
statement (consistent with Independence Standards Board Standard No. 1)
regarding the auditors’ independence.
- Meet with the independent auditors prior to the audit for each fiscal
year to review the planning, staffing and scope of the audit.
- Establish guidelines for the hiring of employees and former employees of the independent auditors.
Clarification of Audit Committee’s Role
While the Committee has the responsibilities and powers set forth in
this Charter, the Committee’s role is one of oversight. It is not
the duty of the Committee to plan or conduct audits or to determine that
the Corporation’s financial statements and disclosures
are complete and accurate and are in accordance with
generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities
of management and the independent auditors.