2004 Committee Charter : USFC

Corporate Governance Committee


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USF Corporation
Audit Committee Charter and
Pre-Approval Policy for Audit and Non-Audit Services


Audit Committee Charter Quicklinks
Purpose
Membership
Meetings
Authrority
Responsibilities and Duties

Purpose

The Audit Committee (the "Committee") of USF Corporation (the "Company") shall report to and assist the Board of Directors (the "Board") by fulfilling its oversight responsibilities for: (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 independent auditor and internal audit function. The Committee's function is one of oversight only and shall not relieve the Company's management of its responsibilities for preparing the financial statements that accurately and fairly present the Company's financial results and condition, or the responsibilities of the independent auditor related to the audit or review of the financial statements.

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Membership

1. The Committee shall be comprised of not less than three members of the Board. The Board shall appoint Committee members and the Committee chairman.

2. Each Committee member shall be both independent and financially literate. At least one member of the Committee shall be designated as a "financial expert".

3. Each Committee member shall have no other relationship to the Company that may interfere with the exercise of his or her independence from the Company, including the receipt from the Company of any compensation other than director's fees and other compensation for their service as a director.

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Meetings

1. The Committee shall meet at least four times a year, with authority to convene additional meetings, as circumstances require.

2. The Committee shall meet separately and periodically with the Company's management, internal audit function, and the independent auditor. It will also meet periodically in private session.

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Authority

The Committee shall have the following authority:

1. Appoint, compensate, and oversee the work of the independent auditor regarding the annual financial statement audit. The independent auditor will report directly to the Committee.

2. Resolve any disagreements between management and the independent auditor.

3. Pre-approve all auditing and permitted non-audit services performed by the independent auditor.

4. Retain independent counsel and other advisors as considered necessary.

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Responsibilities & Duties

The Committee shall have the following responsibilities and duties:

Review with the Company's management and the independent auditor the proposed scope of the audits of the financial statements and controls over financial reporting.


Review with the Company's management and the independent auditor the results of the annual audit and quarterly reviews of the financial statements. This review shall include any restrictions on the scope of the independent auditor's activities and any significant disagreements with the Company's management.


Discuss the annual 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."


Review with the Company's management and the independent auditor the accounting treatment accorded significant transactions, any complex or unusual issues, the development, selection and disclosure of critical accounting estimates, regulatory and accounting initiatives, off-balance sheet structures, and the Company's use of reserves and accruals.


At least annually, obtain and review a report by the independent auditor describing: the independent audit firm's internal quality-control procedures; any material issues raised by the most recent internal 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 any steps taken to deal with any such issues; and all relationships between the independent auditor and the Company.


Understand the scope of the independent auditor's audit of the Company's internal controls over financial reporting, the internal audit function's role in the Company's assessment of those controls, and obtain reports on significant findings and recommendations.


Review the Company's CEO and CFO certification process and disclosures.


Discuss with the Company's management the Company's major policies with respect to risk assessment and risk management.


Review and approve all related party transactions of the Company for potential conflict of interest situations on an on-going basis.


Review the performance of the Company's internal audit function and its annual plan.


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


Periodically review the Company's codes of conduct for their appropriateness.


Review any evidence of material violations of securities law, breach of fiduciary duty or similar violation by the Company or any Company agent disclosed to it by the Company's counsel. Determine if any remedial action is required, and implement such remedial action, if necessary.


Prepare, or oversee the preparation of, the required report from the Committee to the Company's shareholders for inclusion in the annual proxy statement.


Regularly report to the Board concerning Committee activities and issues that arise with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the performance and independence of the independent auditor, and the performance of the internal audit function.


Perform and review with the Board an annual performance evaluation of the Committee.


Review the adequacy of this charter annually and recommend to the Board any modifications.

USF Corporation
Audit Committee Pre-Approval Policy for Audit and Non-Audit Services


Purpose

To document the Audit Committee's (the "Committee's") policy regarding the engagement of USF Corporation's (the "Company's") independent auditor to perform services for the Company.

Policy

For audit services, the independent auditor shall provide the Committee with an engagement letter during the 1st or 2nd quarter of each year, which outlines the scope of the audit services that are proposed for the year and the fees for those services. If agreed to by the Committee, the Committee at either its 1st or 2nd quarterly meeting, which is typically held in April and July, respectively, shall formally accept this engagement letter.

For permissible non-audit services, Company management shall submit to the Committee for approval a list of permissible non-audit services that it recommends the Committee engage the independent auditor to perform during the year. Company management and the independent auditor shall each confirm to the Committee that each service on the list is permissible under all applicable legal requirements. In addition to the list of planned permissible non-audit services, a budget estimating permissible non-audit service spending for the year shall be provided. The Committee shall approve both the list of permissible non-audit services and the budget for such services. The Committee will be informed routinely as to the permissible non-audit services actually performed by the independent auditor pursuant to this pre-approval procedure.

To ensure the proper handling of unexpected matters, the Committee delegates to the Chairman of the Committee the authority to modify the list of approved permissible non-audit services and fees. The Chairman shall report any action taken to the Committee at its next meeting.

The independent auditor shall ensure that all audit and permissible non-audit services performed for the Company have been approved by the Committee.

The Director, Internal Audit shall be responsible for tracking all independent auditor fees against the budget for such services and report at least annually to the Committee.

Non-audit services performed by the independent auditor that are not permissible include:

bookkeeping and other services related to the Company's accounting records or financial statements,

financial information systems design and implementation,

appraisal or valuation services, fairness opinions and contribution-in-kind reports,

actuarial services,

internal audit outsourcing services,

management functions,

human resources,

broker-dealer, investment adviser or investment banking services,

legal services, and

expert services unrelated to the audit performed for the purpose of advocating the Company's interests in litigation or in a regulatory or administrative proceeding or investigation.