2004 Committee Charter : TOLAudit Committee Charter (As Amended September 11, 2003)
The audit committee of the board of directors shall be comprised of such
number of members as designated by the board of directors from time to time,
who meet the independence and experience requirements of the New York Stock
Exchange and the independence requirements of Rule 10A-3(b)(i) of the
Securities Exchange Act of 1934. At least one member of the Committee shall be
designated by the Board as an "audit committee financial expert," as defined
in Item 401 of the Securities and Exchange Commission's Regulation S-K, unless
the Board determines that there is no audit committee financial expert on the
Statement of Purpose
The audit committee shall provide assistance to the directors in fulfilling
their responsibilities relating to (1) the integrity of the company's
financial statements, (2) the company's compliance with legal and regulatory
requirements, (3) the independent auditor's qualifications and independence,
and (4) the performance of the company's internal audit function and
independent auditor. In addition, the audit committee shall prepare the report
required by the rules of the Securities and Exchange Commission to be included
in the Company's annual proxy statement.
In effecting its purposes, the audit committee shall maintain free and open
communication among the directors, the independent auditor, the internal
auditors and the financial management of the Company.
Committee Duties and Responsibilities
The audit committee shall have the responsibility and authority for the
appointment, compensation, retention, evaluation, termination and oversight of
the Company's independent auditor (subject, if applicable, to shareholder
ratification), including resolution of disagreements between management and
the independent auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other audit, review or
attest services for the Company, and the independent auditor shall report
directly to the audit committee. The audit committee shall approve all audit
engagement fees and terms and shall pre-approve, either specifically or, where
appropriate, by the establishment of a policy with regard thereto, all non-
audit engagements with the independent auditor. The audit committee shall
consult with management, but shall not delegate these responsibilities.
The audit committee shall meet as often as it determines, but not less
frequently than quarterly, and shall report regularly to the board of
directors. The audit committee may form and delegate authority to
subcommittees when appropriate.
The audit committee shall have the authority, to the extent it deems
necessary or appropriate, to retain outside legal, accounting or other
advisors to advise the committee and shall, as appropriate, obtain advice and
assistance from such advisors.
The audit committee may request any officer or employee of the Company or
the Company's outside counsel or independent auditor to attend a meeting of
the Committee or to meet with any members of, or consultants to, the
The Company must provide for appropriate funding, as determined by the
audit committee, for payment of (i) compensation to the independent auditor
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company; (ii)
compensation to any outside legal, accounting or other advisors employed by
the audit committee, and (iii) ordinary administrative expenses of the audit
committee that are necessary or appropriate in carrying out its duties.
The audit committee shall meet separately with management, the internal
auditors and the independent auditor in separate executive sessions
The audit committee shall make regular reports to the Board. The audit
committee shall annually review the audit committee's own performance.
The audit committee shall consider and act upon any matters required by law
to be acted upon by them and may consider and act upon any other matters
deemed appropriate by the committee.
In carrying out its duties and responsibilities, the audit committee
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and to ensure to the directors and shareholders
that the corporate accounting and reporting practices of the Company are in
accordance with all requirements and are of the highest quality.
In carrying out its duties and responsibilities, the audit committee, to
the extent it deems necessary or appropriate, will:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review with the independent auditor, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal controls or particular
areas where new or more detailed controls or procedures are desirable.
3. Inquire of management, the internal auditor, and the independent auditor
about significant risks or exposures and assess the steps management has taken
to minimize such risks to the Company.
4. The audit committee shall (a) review and discuss, prior to their filing
on Form 10-K or 10-Q, respectively, the annual audited financial statements
and quarterly financial statements with management and the independent
auditor, including the Company's disclosures under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the use of
pro-forma or adjusted non-GAAP information, and recommend to the Board whether
the audited financial statements should be included in the Company's Form 10-
K; and (b) discuss earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies, provided that
such discussion may be general in nature, and the audit committee need not
discuss in advance each earnings release or each instance in which the Company
may provide earnings guidance.
5. Review with the Company's independent auditor any audit problems or
difficulties and management's response.
6. Discuss with management and the independent auditor: (a) 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; (b) analyses prepared by management and/or the
independent auditor 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; (c) the effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements of the Company,
and (d) issues with respect to risk assessment and risk management.
Oversight of the Company's Relationship with the Independent Auditor
7. Have a clear understanding with the independent auditor that they are
ultimately accountable to the audit committee, as the shareholders'
representatives, and that the audit committee has the ultimate authority in
deciding to engage, evaluate, and if appropriate, terminate their services.
8. Obtain and review with the independent auditor, a report from the
independent auditor regarding (a) the independent auditor's internal quality-
control procedures, (b) any material issues raised by the most recent quality-
control review, or peer review, of the firm, 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 firm,
and (c) any steps taken to deal with any such issues delineating the nature
and scope of all of the independent auditor's relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. Evaluate the qualifications,
performance and independence of the independent auditor, including considering
whether the independent auditor's quality controls are adequate and the
provision of non-audit services is compatible with maintaining the auditor's
independence, and taking into account the opinions of management and the
internal auditor. The audit committee shall present in its conclusions to the
Board and, if so determined by the audit committee, recommend that the Board
take appropriate action to satisfy itself of the qualifications, performance
and independence of the independent auditor.
9. Set clear hiring policies for employees or former employees of the
Company's independent auditor.
10. Discuss with the national office of the independent auditor issues on
which they were consulted by the Company's audit team and matters of audit
quality and consistency.
11. Meet with the independent auditor and financial management of the
Company as necessary to review or discuss the audit scope for the current year
and audit procedures to be utilized; at the conclusion of the audit, review
the audit results and approaches and financial information included in the
financial statements and discuss the auditor's judgments about the quality,
not just the acceptability, of the Company's accounting principles as applied
in its financial reporting, including the matters required to be discussed by
Statement on Accounting Standards No. 61.
12. Request assurance from the independent auditor that Section 10A of the
Securities Exchange Act of 1934 has been satisfied.
Oversight of the Company's Internal Audit Department
13. Review and concur with management's appointment, termination, or
replacement of the director of internal audit.
14. Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year and the coordination of such plans with the
15. Receive prior to each meeting, a progress report on the proposed
internal audit plan, with explanations for any deviations from the original
Other Audit Committee Responsibilities
16. Investigate any matter brought to its attention within the scope of its
duties, with the power to utilize inside or outside counsel, or other persons
or entities having special competence as necessary, for this purpose if, in
its judgment, that is appropriate.
17. Establish procedures for (a) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or accounting matters, and (b) theconfidential, anonymous submission
by employees of the Company of concerns regarding questionable accounting or auditing matters.
18. Obtain reports from management, the Company's senior internal auditing
executives and the independent auditor that the Company and its subsidiaries
and affiliated entities are in conformity with applicable legal requirements,
the Company's Code of Business Conduct and Ethics and the Company's Code of
Ethics for Senior Executive Officers. Review reports and disclosures of
affiliated party transactions. Advise the Board with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's Code of Business Conduct and Ethics and the
Company's Code of Ethics for Senior Executive Officers.
19. Serve as the Qualified Legal Compliance Committee (the "QLCC") in
accordance with Section 307 of the Sarbanes-Oxley Act of 2002 and Section 205
of the SEC's Standards of Professional Conduct for Attorneys ("Standards"). As
the QLCC the audit committee shall:
(a) Establish written procedures for the confidential receipt, retention
and consideration of evidence of a material violation under Section
205.3 of the Standards by any officer, director, employee or agent of
the Company (each, a "material violation") that is reported to the
audit committee by the Company's chief legal officer or other legal
(b) Inform the Company's chief legal officer or chief executive officer
of any report of evidence of a material violation that is reported to
the audit committee by the Company's chief legal officer or other
(c) Determine whether an investigation is necessary regarding any report
of evidence of a material violation that is reported to the audit
committee by the Company's chief legal officer or other legal
advisors. If the audit committee determines an investigation is
necessary or appropriate: (i) notify the full Board; (ii) initiate an
investigation, which may be conducted either by the chief legal
officer or by outside attorneys, and (iii) retain such additional
expert personnel as the audit committee deems necessary. At the
conclusion of any such investigation: (x) recommend, by majority
vote, that the Company implement an appropriate response (as defined
in Section 205.2(b) of the SEC's Standards) to evidence of any
material violation; and (y) inform the chief legal officer, the chief
executive officer and the Board of the results of any such
investigation and any appropriate remedial measures to be adopted.
(d) Acting by majority vote, take all other appropriate action to respond
to evidence of any material violation that is reported to the audit
committee by the Company's chief legal officer or other legal
20. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any employee complaints or
published reports, which raise material issues regarding the Company's
financial statement or accounting policies.
21. Discuss with the Company's General Counsel legal matters that may have a
material impact on the financial statements or the Company's compliance
Limitation of Audit Committee's Role
While the audit committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the audit committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.