2003 Audit Charter: IRF

Revised Audit Committee Charter


1. FORMATION. The Board of Directors ("Board") of International Rectifier Corporation, a Delaware corporation ("Company") has established the Audit Committee ("Committee") pursuant to Section 141(c)(2) of the Delaware General Corporation Law and Article III, Section 15 of the Company's Bylaws.

2. STATEMENT OF PURPOSE. The Committee will assist the Board in fulfilling the Board's oversight of (1) the integrity of the Company's financial statements, (2) the Company's compliance with legal and regulatory requirements, (3) the external auditors' qualifications and independence, and (4) the performance of the Company's internal audit function and external auditors. The Committee will prepare the annual report included in the Company's proxy statement as required by the SEC. To effectively perform his or her role, each Committee member will obtain an understanding of the responsibilities of Committee membership as well as the Company's business, operations, and risks.

The Committee is not responsible for planning or conducting audits or determining that the Company's financial statements are accurate and are in accordance with generally accepted accounting principles ("GAAP"). This duty is the responsibility of management and the external auditors, who are ultimately accountable to the Committee. Likewise, it is not the duty of the Committee independently to verify information presented to it, unless special circumstances require independent verification. The statement of responsibilities below is in all respects qualified by this limitation.

3. COMPOSITION AND QUALIFICATIONS. The Committee shall be comprised of not fewer than three members of the Company's Board. Subject to the foregoing, the exact number of members of the Committee shall be fixed and may be changed from time to time by resolution duly adopted by the Board. One of the members of the Committee shall be designated by the Board as the chairperson ("Chairperson") of the Committee. The Board shall appoint the members of the Committee to serve until their successors have been duly designated. Members of the Committee may be removed by the Board for any reason and at any time. Vacancies on the Committee shall be filled by the Board. The members of the Committee shall meet the standards of independence and other qualifications set forth on Exhibit A hereto. The Company must disclose in the periodic reports required by section 13(a) of the Securities Exchange Act of 1934 (the "Act") whether or not it has at least one member who is a financial expert as described in Exhibit A.

4. RESPONSIBILITIES. The Committee shall have responsibilities in the following areas:

Review with management, external auditors and internal auditors the adequacy of the Company's internal accounting controls and procedures.

Inquire about internal control recommendations made by internal and external auditors and whether they have been implemented by management.



Review reports prepared by management and by the external auditors of significant accounting and financial reporting issues and judgments and their impact on the financial statements.

Review periodically with the internal and external auditors significant risks and exposures and the plans to monitor, control and minimize such risks and exposures.

Review significant changes to the Company's auditing and accounting practices as suggested by the internal and external auditors or management and discuss them on a timely basis.

Meet with management and the external auditors to review and discuss the annual audited financial statements, the results of the audit and the interim financial statements, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and obtain from the external auditors assurance that the audit was conducted in a manner consistent with Section 10A of the Act, as amended.

Require the external auditors to review the financial information included in the Company's interim financial statements prior to filing its Form 10-Q Reports.

Review with management and the external auditors earnings press releases and financial information and earnings guidance provided to analysts and rating agencies.

Periodically obtain reports from management, auditors, general counsel, tax advisors or any regulatory agency regarding regulatory compliance, transactions with affiliates, and other legal matters that may have a material impact on financial statements and the consideration of those matters in preparing the financial statements.

Review the effectiveness of the policies and procedures for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) on any reporting deficiencies, fraudulent acts or accounting irregularities.

Review the activities, structure resources, qualifications and effectiveness of the internal audit function, and the performance of the director of internal audit.

Exercise the sole authority and responsibility to select, evaluate and replace the external auditor (or to nominate the external auditors to be proposed for shareholder approval in any proxy statement).

Review, evaluate and approve the annual engagement proposal of the external auditors, including the proposed audit scope and approach, and level of fees to be paid to the external auditors.

Pre-approve all auditing services and all non-auditing services to be performed by the external auditor, provided that the external auditor shall not be retained to perform those



prohibited non-audit functions listed on Exhibit B hereto. The approved non-auditing services must be disclosed in the Company's periodic public reports required by section 13(a) of the Act. The approval of non-auditing services can be delegated to one or more members of the Committee, but the decision must be presented to the full Committee at the next scheduled meeting.

Obtain and review reports from the external auditor, at least annually, regarding:

the external auditors' internal quality-control procedures;

any material issues raised by the most recent internal quality-control review, or peer review, of the external auditor, 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 external auditor, and any steps taken to deal with any such issues; and

all relationships between the external auditor and the Company. in accordance with Independence Standards Board No. 1.
Actively engage in a dialogue with the external auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditors and recommend that the Board take appropriate action in response to the external auditors' report to satisfy itself of the external auditors' independence.

Obtain and review timely reports from the external auditor regarding:

all critical accounting policies and practices to be used by the Company;

all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditor; and

all other material written communications between the external auditor and management, including any management letter or schedule of unadjusted differences.
Review with the external auditor any problems or difficulties the external auditor may have encountered, including: (1) any restrictions on the scope of activities or access to required information; (2) any changes required in the planned scope of the internal audit; and (3) any recommendations made by the external auditors as a result of the audit.

Discuss the matters required to be discussed by Statement of Auditing Standards No. 61 as it may be modified or supplemented from time to time ("SAS 61").

Establish procedures for (1) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (2) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

Set clear hiring policies for employees or former employees of the external auditor.



Regularly report to the Board on the Committee's activities and make appropriate recommendations.

Discuss Company policies with respect to risk assessment and risk management.

Annually evaluate the effectiveness of the Company's finance department.

Annually evaluate the performance of the Committee.

Review any special executive compensation or benefit arrangements.

Annually review and (if appropriate) update this charter, subject to Board approval of changes.


The Committee shall hold regular meetings on such days as it shall determine at least four times per year. Special meetings of the Committee will be held at the request of the Chairperson of the Committee or any two other Committee members. Minutes shall be regularly kept of Committee proceedings.


Prior to each regularly scheduled meeting, the Committee members will receive notice of and an agenda for the meeting. Other topics for discussion may be introduced at the meeting or by notice to the Chairperson at the request of any Committee member.

The Committee may regularly or from time-to-time ask corporate officers and other employees of the Company to attend the meetings.

The Committee may adopt rules for its meetings and activities. In the absence of any such rules, the Committee actions shall be governed by the Company's Bylaws and applicable law, as applicable to Board meetings and activities. In all cases, a quorum of the Committee shall be a majority of the persons then serving as members of the Committee.

Meet with the external auditors, internal auditors and management in separate executive sessions at least quarterly to discuss any matters that the Committee or these groups believe should be discussed privately.

6. OUTSIDE ASSISTANCE. The Committee shall have the authority to request and receive access to any internal or external information it requires to fulfill its duties and responsibilities. The Committee is authorized to engage such outside professional or other services as in its discretion it deems necessary to fulfill its responsibilities, whose compensation shall be funded by the Company.