Committees of the Board


The Reynolds and Reynolds Company
May 2, 2005



The Audit Committee is established by the Board of Directors for the primary purpose of assisting the Board in overseeing:

Consistent with this function, the Audit Committee should encourage continuous improvement of, and should foster adherence to, the company’s policies, procedures and practices at all levels. The Audit Committee should also provide an open avenue of communication among the independent auditor, financial and senior management, the internal auditing department, and the Board of Directors.

The Audit Committee has the authority to obtain advice and assistance from outside legal, accounting, or other advisors as deemed appropriate to perform its duties and responsibilities.
The company shall provide appropriate funding, as determined by the Audit Committee, for compensation to the independent auditor and to any advisers that the Audit Committee chooses to engage.

The Audit Committee’s responsibility is one of oversight. It is the responsibility of the company’s management to prepare consolidated financial statements in accordance with applicable laws and regulations and of the company’s independent auditor to audit those financial statements.

The Audit Committee will primarily fulfill its responsibilities by carrying out the activities enumerated in the “Responsibilities and Duties” section of this charter. The Audit Committee will review and reassess the adequacy of this charter on an annual basis, update it as needed and submit it for approval by the Board of Directors.

The Audit Committee will report regularly to the Board of Directors regarding the execution of its duties and responsibilities. Annually, a performance assessment relative to the Audit Committee’s purpose, responsibilities and duties will be performed. This assessment will be achieved through the annual performance process performed by the Nominating and Governance Committee.

Composition and Meetings

The Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent directors (as defined by all applicable rules and regulations), and free from any relationship (including disallowed compensatory arrangements) that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. Additionally, any member who holds 20% or more of the company’s voting stock cannot chair or be a voting member of the Audit Committee. Members serving on the Audit Committee are limited to serving on two other audit committees of public companies, unless the Board of Directors evaluates and determines that these other commitments would not impair the ability of such member to effectively serve on the Audit Committee. Any such determination shall be disclosed in periodic filings as required by the SEC. Such determination will be made by the Board in its business judgment.

All members of the Audit Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall be an “audit committee financial expert” in compliance with the criteria established by the SEC. The existence of such member(s) shall be disclosed in periodic filings as required by the SEC. Such qualifications will be determined by the Board in its business judgment.

The members of the Audit Committee shall be appointed annually by the Board upon the recommendation of the Nominating and Governance Committee. The Chair of the Audit Committee shall be appointed by the Board upon the recommendation of the Nominating and Governance Committee. The members of the Audit Committee may be removed or replaced, and any vacancies on the Audit Committee shall be filled by the Board upon the recommendation of the Nominating and Governance Committee.

The Audit Committee shall meet at least four times annually, or more frequently as circumstances dictate. Each regularly scheduled meeting shall conclude with an executive session of the Audit Committee absent members of management. As part of its job to foster open communication, the Audit Committee should meet periodically with management, the director of the internal auditing department and the independent auditor in separate executive sessions to discuss any matters that the Audit Committee or each of these groups believe should be discussed privately.

Responsibilities and Duties

To fulfill its responsibilities and duties the Audit Committee shall:

Assess Risks and the Control Environment

1.       Review the regular internal reports (or summaries thereof) to management prepared by the internal auditing department and assess the quality and adequacy of management’s responses.

2.       Review the independent auditor’s Management Letter recommendations and assess the quality and adequacy of management’s responses.

3.       Review material legal or regulatory matters, and inquire as to any known non-compliance with the Code of Conduct.

4.       Discuss policies with respect to risk assessment and risk management. Such discussions should include the company’s major financial and accounting risk exposures and the steps management has undertaken to control them.

5.       In consultation with the independent auditor and the internal audit department, assess the quality, adequacy and effectiveness of the company’s internal controls and any significant deficiencies or material weaknesses in internal controls.

6.       Review with management, and any outside professionals as the Committee considers appropriate, the effectiveness of the company’s disclosure controls and procedures.

7.       Establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing matters or potential violations of law.

8.       Establish and maintain procedures for the confidential, anonymous submission by company employees regarding questionable accounting or auditing matters or potential violations of law.

9.       Maintain minutes or other records of meetings and activities of the Audit Committee.


Oversee the Financial Reporting Process

1.       Review and discuss with management and the independent auditor the company’s annual financial statements, quarterly financial statements, internal control reports (or summaries thereof) and the company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before the filing of the company’s Annual Report on Form 10-K or Quarterly Reports on Form 10-Q.

2.       Recommend to the Board whether the financial statements should be included in the Annual Report on Form 10-K.

3.       Review with management earnings press releases, including review of any “pro-forma” or “adjusted” non-GAAP information, before they are issued.

4.       Discuss with management financial information and earnings guidance provided to analysts and rating agencies. Such discussions may be on general terms (i.e., discussion of the types of information to be disclosed and the type of presentation to be made).

5.       Prepare the report that the SEC requires be included in the company’s annual proxy statement.

6.       Review with management major issues regarding accounting principles and financial statement presentations, including any significant changes in the company’s selection or application of accounting principles, and major issues as to the adequacy of the company’s internal controls and any special audit steps adopted in light of material control deficiencies.

7.       Review with management analyses prepared for setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
8. Review with management the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the company.


Oversee and Evaluate the Audit Process

1.       Appoint (subject to shareholder ratification), compensate and oversee the work performed by the independent auditor for the purpose of preparing or issuing an audit report or related work. Review the performance of the independent auditor and remove the independent auditor if circumstances warrant. The independent auditor shall report directly to the Audit Committee and the Audit Committee shall oversee the resolution of disagreements between management and the independent auditor in the event that they arise. Consider whether the auditor’s performance of permissible nonaudit services is compatible with the auditor’s independence.

2.       Review with management, the internal audit department and the independent auditor the scope, planning and staffing of the proposed audit for the current year. Review the internal audit function’s organization, responsibilities, plans, results, budget and staffing. In addition, management shall consult with the Committee on the appointment, replacement, reassignment or dismissal of the internal audit director.

3.       Review with the independent auditor any problems or difficulties and management’s response. Review the independent auditor’s attestation and report on management’s internal control report and hold timely discussions with the independent auditor regarding the following:

1.       all critical accounting policies and practices used by the company in preparing its financial statements;

2.       all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor;

3.       other material written communications between the independent auditor and management including, but not limited to, the management letter and schedule of unadjusted differences; and

4.       an analysis of the auditor’s judgment as to the quality of the company’s accounting principles, setting forth significant reporting issues and judgments made in connection with the preparation of the financial statements.

4.       Obtain and review with the lead audit partner, annually or more frequently as the Audit Committee considers appropriate, a report by the independent auditor describing:

1.       the firm’s internal quality control procedures;

2.       any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, or by any inquiry, review or investigation by governmental, professional or other regulatory authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and

3.       an assessment of the auditor’s independence and all relationships between the independent auditor and the company.

5.       Review and preapprove both audit and nonaudit services to be provided by the independent auditor (other than with respect to de minimis exceptions permitted by the Sarbanes-Oxley Act of 2002). This duty may be delegated to one or more designated members of the Audit Committee with any such preapproval reported to the Audit Committee at its next regularly scheduled meeting. Approval of nonaudit services shall be disclosed to investors in periodic reports required by Section 13(a) of the Securities Exchange Act of 1934.

6.       Set clear hiring policies, compliant with governing laws or regulations, for employees or former employees of the independent auditor.

7.       Annually, review and recommend changes (if any) to the internal audit charter.

8.       Periodically review with the internal audit director any significant difficulties, disagreements with management, or scope restrictions encountered in the course of the department’s work.

The foregoing list of duties is not exhaustive, and the Audit Committee may, in addition, perform such other functions as may be necessary or appropriate for the performance of its oversight function. The Audit Committee shall have the power to delegate its authority and duties to subcommittees or individual members of the Audit Committee as it deems appropriate. In discharging its oversight role, the Audit Committee shall have full access to all Company books, records, facilities and personnel.

Adopted: May 02, 2005