AUDIT COMMITTEE CHARTER
2003 Audit Charter: CLX
PURPOSE AND AUTHORITY
The Audit Committee is established by the Board of Directors ("Board") for the purposes of:
1. assisting the Board in overseeing the:
2. preparing the report required by the Securities and Exchange Commission ("SEC") proxy rules to be included in the Company's annual proxy statement.
The Audit Committee is empowered to obtain advice and assistance from outside legal, accounting or other advisors, and to fully investigate any matter brought to its attention, as deemed appropriate to perform its duties and responsibilities. The Company shall provide appropriate funding, as determined by the Audit Committee, for the Audit Committee's administrative expenses, and for compensation to the independent auditor and to any advisors that the Audit Committee chooses to engage.
This charter shall be reviewed and updated annually. Additionally, the Audit Committee will perform an annual assessment of its performance relative to the purpose, duties and responsibilities outlined herein.
COMPOSITION AND MEETINGS
The membership of the Audit Committee shall consist of at least three directors, as determined by the Board, who are generally knowledgeable in financial and auditing matters. Each member shall be an independent director (as defined by all applicable rules and regulations), and free of any relationship that, in the opinion of the Board, would interfere with his or her individual exercise of independent judgement. The Board should determine whether at least one member of the Committee qualifies as an "Audit Committee financial expert" in compliance with the criteria established by the SEC for purposes of making appropriate disclosures in periodic filings as required by the SEC.
The Committee will meet at least four times annually. As part such meetings, the Committee will meet, at least annually, with management, the Vice President of Internal Audit and the independent auditors in private executive sessions. Additionally, the Committee will meet quarterly with the independent auditors and management to discuss the annual and quarterly financial statements, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations", quality of earnings, reserves and accruals, suitability of accounting principles, highly judgmental areas, audit adjustments, whether or not recorded, and such other areas of inquiry as may be appropriate, and to recommend to the Board whether the audited financial statements should be included in the Annual Report on Form 10-K.
The Audit Committee's primary responsibilities include:
Information Released to the Public: Discuss with management and the independent auditors the general nature of information to be disclosed and the type of presentation to be made in earnings press releases, and in financial information and earnings guidance provided to analysts and rating agencies.
¨ any problems or difficulties encountered during the audit and management's response, including any restrictions on the scope of the independent auditor's activities or on access to requested information and any significant disagreements with management;
¨ critical accounting policies and practices, including alternative treatments within generally accepted accounting principles, ramifications of using such alternative treatments, and the auditor's conclusions about the treatment selected by the Company;
¨ other reports of the independent auditor, including the auditor's attestation on management's internal control report, management letter and schedule of unadjusted audit differences.
n Internal Audit: Oversee the internal audit function, including:
n Financial Reporting Processes: In consultation with the independent auditor and internal auditors, review:
n Compliance and Risk Management: Review management's practices to identify, manage and monitor compliance with applicable government and regulatory requirements, including:
Anonymous Reporting: Establish and maintain procedures for the confidential, anonymous submission by Company employees regarding questionable accounting or auditing matters. Maintain procedures to receive, retain and address complaints regarding accounting, internal controls or auditing matters.
Qualified Legal Compliance Committee: Act as the Company's Qualified Legal Compliance Committee, to review matters raised by the Company's attorneys with respect to material violations of federal or state securities law, fiduciary duties or similar federal or state law (as defined in Title 17, Chapter 2 of the Code of the Federal Regulations, Part 205.2 (k)) by the Company, its officers, directors, employees or agents, with the appropriate authority and responsibility as set forth in the regulations:
Other Responsibilities: Perform other activities consistent with this Charter, the Company's bylaws and governing law, as the Committee or the Board deems necessary or appropriate.