Audit Committee Charter
The Audit Committee of the Board of Directors of Expeditors is authorized by
the Bylaws and was established by resolution of the Board adopted on May 17, 1984 some four months
prior to the Company's initial public offering. The relevant portions of the
resolution read as follows:
- FURTHER RESOLVED, that the
function of the Audit Committee shall be to meet with the internal audit
staff of the Company and its public accountants to review (i) the scope and findings of the annual audit,
(ii) quarterly financial statements, (iii) accounting policies
and procedures and the Company's financial reporting, and (iv) the
internal controls employed by the Company.
Historically, the Audit Committee has been composed exclusively of the
non-employee Board members and has met in advance of quarterly earnings
releases to review and approve the Company's financial results. This Charter is
intended to satisfy SEC and NASD rules for audit committee charters and this
document, which has been adopted by unanimous vote of the Board, supplements
the resolution set forth above.
The Audit Committee shall consist of not less than three nor
more than five members of the Board of Directors. No member of the Audit
Committee shall be an active or retired employee of the Company, and all
members shall be independent of management according to both the letter and
spirit of the applicable SEC and NASD/Amex rules. In addition, each member
shall be free from any relationship that, in the opinion of the Board of
Directors, would interfere with that individual's exercise of independent
judgment in carrying out responsibilities as a member of the Audit Committee.
In serving on the Audit Committee, each independent director represents that
he or she is able to read and understand fundamental financial statements,
including the balance sheet, income statement, and cash flow statement or will
take steps to become able to do so within a reasonable period of time.
The Audit Committee shall hold four regularly scheduled meetings each year,
normally in the first week of February, May, August and November, for the
purpose of approving the contents of the Company's draft earnings release.
Special meetings of the Committee may be called from time to time upon notice
issued by any two directors, whether or not such directors are members of the
Committee, or as otherwise provided pursuant to the Company's Bylaws.
A majority of the members shall constitute a quorum of the Committee. A
majority of those members in attendance shall decide any question brought
before any meeting of the Committee.
The Audit Committee serves as the representative of the Board for the
general oversight of Company affairs in the area of financial accounting and
reporting and the underlying internal controls as well as the financial aspects
of the Company's funded benefit plans. Through its activities, the Committee
will facilitate open communication among directors, the Company's independent
accountants, and corporate management.
The Audit Committee will assist the Board in discharging its fiduciary
responsibilities to shareholders, providing assurance as to the independence of
the Company's outside accountants and the adequacy of disclosure to shareholders
and to the public.
Specifically, the Audit Committee will:
- Approve the contents of the
Company's draft earnings release following consideration of the financial
statements, supporting schedules and discussions with management and the
reviewing independent public accountants.
- Recommend to the Board,
annually, the appointment of a firm of independent public accountants as
the Company's outside auditors and shall approve such other independent
public accountants, if any, as may be selected to serve as statutory
auditors of any foreign entity consolidated with the financial results of
- Designate one member of the
Audit Committee as the "expert" as defined in the current NASD
- Review with representatives
of the independent accountants
- Any significant
changes in the plan for and scope of its annual audit of the Company's
- Written disclosures
and the letter from the independent accountants required by Independence
Standards Board Standard No. 1 discussing and forming a judgment
concerning the independent accountant's independence and confirm that the
independent accountants are ultimately accountable to the Board and the
- The results of the
- Any recommendations
with respect to internal controls and other financial matters, including
any perceived weaknesses in the Company's internal controls, policies,
- Any significant
changes made by management in the basic accounting principles and
reporting standards used in the preparation of the Company's financial
- Discuss any other
issue, including any matters covered by SAS 61, which the independent
accountant may bring to the attention of the Committee.
- Recommend to the Board that
the audited financial statements be included in the Company's Annual
Report on Form 10-K by preparing the Audit Committee Report to be
included with the proxy statement relating to the annual meeting of
shareholders at which directors are elected.
- Review the extent of any
services outside the audit area performed for the Company by its
- Review the fees proposed by
the Company's independent accountants for their services.
- Review the work of the
Company's internal audit function including management's plans for future
- Review whether management
has sought a second opinion regarding a significant accounting issue, and,
if so, obtain the rationale for the particular accounting treatment
- Review compliance by
officers and employees with the Company's policies on business ethics and
- Make such other
recommendations to the Board on such matters, within the scope of its
functions, as may come to its attention and which in its discretion
warrant consideration by the Board.
- Meet privately from time to
time with representatives of the independent accountants and management.
- Review applicable SEC and
NASD rules and reassess the adequacy of this Audit Committee Charter on an
annual basis prior to or during the February meeting of the Committee and
to make prompt recommendations to the Board in the event that changes are
deemed necessary or desirable.