CSX Board Information

Audit Committee Charter  

The Audit Committee's ("Committee") primary function is to assist the Board of Directors ("Board") oversight of: (i) the integrity of the CSX Corporation's ("Corporation") financial statements and accounting methodology, (ii) the Corporation's compliance with legal and regulatory requirements, (iii) the independent auditors' qualifications and independence, and (iv) the performance of the independent auditors and the Corporation's internal audit function.

In addition, the Committee shall provide over the names of the Committee members the required Audit Committee Report for the Corporation's Proxy Statement required for the Corporation's Annual Meeting of Shareholders.


Membership and Operations  

The Committee shall consist of at least three directors, each of whom shall meet the independence requirements of the New York Stock Exchange ("NYSE") and Rule 10A-3 of the Securities Exchange Act of 1934, as such rules and provisions may be amended from time to time. Each member of the Committee shall be financially literate, have basic familiarity with accounting and at least one member of the Committee shall have "accounting or related financial management expertise," as such qualifications are interpreted by the Board in its business judgment.

The members of the Committee shall be elected by the Board annually and shall serve until their successors have been duly elected and qualified.


Meetings of the Audit Committee  

The Committee shall meet at least once every fiscal quarter, or more frequently if circumstances dictate, and shall meet periodically without management present. The Committee periodically shall meet separately with management, internal auditors and with independent auditors to discuss any matters that the Committee or any of these persons or firms believes should be discussed privately.


Duties and Responsibilities  

The Committee's primary responsibility is oversight. The Corporation's management is responsible for the preparation, presentation and integrity of the Corporation's financial statements, and, with the internal audit department, is responsible for maintaining appropriate accounting and financial reporting policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations relating to disclosures and financial reporting.

The Corporation's independent auditors shall report directly to the Committee but are accountable to the Committee and the Board, as representatives of the shareholders. The independent auditors are responsible for planning and executing a proper audit of the Corporation's annual financial statements, reviews of the Corporation's quarterly financial statements prior to filing of each quarterly report and other procedures. In this regard the Committee members are not, and do not represent themselves as performing the functions of, auditors or accountants.

In carrying out its oversight responsibilities, the Committee shall have the following duties and authority:

Independent Auditors

1.        The Committee shall pre-approve, or adopt appropriate procedures to pre-approve, all audit and non-audit services provided by the Corporation's independent auditors.

2.        The Committee, in its capacity as a committee of the Board, shall directly appoint, retain, compensate and oversee the work of the independent auditors, including sole authority to approve all compensation and fees paid to the independent auditors for audit and non-audit work, including resolution of disagreements between management and the auditor regarding financial reporting. Neither the Corporation nor its subsidiaries shall employ the independent auditors' firm to perform non-audit work which itself may be subject to audit by the same firm.

3.        The Committee shall review, at least annually, the qualifications, performance and independence of the independent auditors. In conducting such a review, the Committee shall obtain and review a report prepared by the independent auditors, describing:

a.        the independent auditors' internal quality control procedures;

b.        any material issues raised by:

                         the most recent internal quality control review, or peer review, of the independent auditors, or

                         any inquiry or investigation by governmental or professional authorities, within the previous 5 years, respecting any independent audits conducted by the independent auditors, and any steps taken to deal with any such issues; and

c.        all relationships between the independent auditors and the Corporation including a statement of the fees billed in each of the last two fiscal years by category of service.

4.        The Committee shall ensure that rotation of the independent auditors' audit partners satisfies applicable regulatory requirements and set Corporation policies about hiring current or former employees of the independent auditors.

5.        The Committee shall establish policies for the Corporation's hiring of employees or former employees of the independent auditors who participated in any capacity in the audit of the Corporation, including a prohibition, as required by the Securities and Exchange Act of 1934, against the Corporation's chief executive officer, chief financial officer, controller or chief accounting officer (or any person serving in an equivalent position) having worked on the Corporation's audit as an employee of the independent auditors during the one year preceding the initiation of the current audit.

Internal Auditors

6.        The Committee shall review the performance of the internal audit department, including the proposed audit plans for the coming year and the results of internal audits and management's responses thereto.

7.        The Committee shall review activities, organizational structure and resources of the internal audit function.

Financial Reporting Principles and Policies; Internal Controls and Procedures

8.        In advance of each fiscal year, the Committee shall meet with the independent auditors, internal auditors and the Corporation's senior management to review the scope and methodology of the proposed audits for such fiscal year. Independent auditors and internal auditors shall provide regular reports to the Committee during the year on the underlying process and status of their audits and any findings or preliminary conclusions that have been reached.

9.        Management and the independent auditors shall review with the Committee the Corporation's annual and quarterly financial statements, including the Corporation's disclosure under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in its SEC reports. Throughout the year, the independent auditors shall review with the Committee their assessment as to the adequacy of the Corporation's structure of internal control over financial accounting and reporting, and their qualitative judgments as to accounting principles employed by the Corporation and the conclusions expressed in the Corporation's financial reports. The independent auditors shall review with the Committee significant judgments made by management in the preparation of the financial statements.

10.     The Committee shall discuss with the independent auditors any difficulties encountered in the course of the audit, including any restrictions on the scope of their activities, difficulties accessing information and any significant disagreement with management.

11.     The Committee shall discuss with the independent auditors the matters required to be discussed by Statement of Accounting Standards 61, as it may be modified or supplemented.

12.     The independent auditors, internal auditors, and management shall identify to the Committee significant business, financial, or legal issues that may significantly impact the Corporation's financial statements and internal control systems. As necessary, management shall report to the Committee all significant litigation in which the Corporation and its subsidiaries are engaged, as well as the anticipated impact of such litigation on the Corporation.

13.     The Committee shall discuss the Corporation's earnings announcements prior to release.

14.     The Committee shall discuss the general types of financial information and earnings guidance provided to analysts and rating agencies.

15.     The Committee shall discuss guidelines and policies governing the process by which senior management of the Corporation and the relevant departments of the Corporation assess and manage the Corporation's exposure to risk, and the Corporation's major financial risk exposures and the steps management has taken to monitor and control such exposures.

16.     Both the independent auditors and internal auditors shall report as soon as possible to the Committee any material weaknesses in internal control systems.

17.     The Committee shall establish and maintain procedures for the receipt, retention and treatment of complaints regarding the Corporation's accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by employees of concerns regarding questionable auditing or accounting matters.

18.     The Committee shall also be responsible for approving, as may be required by the NYSE, any related party transactions.


19.     As needed, the Committee shall receive reports as to material violations of the Corporation's Code of Ethics and other compliance responsibilities. At least annually, management shall review with the Committee the Corporation's monitoring of the Code of Ethics and procedures to ensure compliance with laws and governmental regulations.

20.     In addition to the foregoing, the Committee shall perform such other functions as may be committed to it under the resolutions and other directives of the Board.

The Committee shall report its activities to the full Board on a regular basis and make such recommendations with respect to the matters covered by this Charter and other matters as the Committee may deem necessary or appropriate.

The Committee shall review this Charter at least annually with the advice of the Governance Committee and recommend any changes to the full Board.

In fulfilling his or her responsibility, each member of the Committee is entitled to rely in good faith upon the Corporation's records and upon information, opinions, reports or statements presented by any of the Corporation's officers or employees, or by any other person as to matters the member reasonably believes are within such other persons professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. Each member of the Committee also may rely in good faith upon actions taken by other committees of the Board as committed to such committees under the resolutions and other directives of the Board.



The Committee shall prepare and review with the Board an annual performance evaluation of the Committee. The evaluation must compare the performance of the Committee with the requirements of this charter. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the chairperson of the Committee or any other member of the Committee designated by the Committee to make this report.


Delegation to Subcommittee  

The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee. The Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent auditors, provided that any such approvals are presented to the Committee at its next scheduled meeting. Any such delegation shall be by majority vote of the Committee.


Resources and Authority of the Audit Committee  

The Committee shall have available to it the resources and authority appropriate to discharge its duties and responsibilities, including support personnel and management staff, and shall have the authority to select, retain, terminate and approve the fees and other retention terms of outside auditors, special or independent counsel, accountants, consultants and other advisors, as it deems necessary or appropriate without seeking approval of the Board or management. The Corporation shall provide appropriate funding to the Committee to allow the Committee to compensate the Corporation's independent auditors, to compensate any advisors retained by the Committee and to pay for ordinary administrative expenses of the Committee.