2003 Committee Charter : VTSS
VITESSE SEMICONDUCTOR CORPORATION
A Delaware corporation
Audit Committee Charter
Adopted December 17, 2002
The Audit Committee is created by the Board of Directors of the Company to:
· assist the Board in its oversight of
· the integrity of the financial statements of the Company;
· the qualifications, independence and performance of the Company's
· the performance of the Company's internal audit function; and
· compliance by the Company with legal and regulatory requirements; and
· prepare the audit committee report that Securities and Exchange Commission
rules require to be included in the Company's annual proxy statement.
The Audit Committee shall consist of at least three members, comprised solely of
independent directors meeting the independence and experience requirements of Nasdaq.
The Nominating and Corporate Governance Committee shall recommend nominees for
appointment to the Audit Committee annually and as vacancies or newly created
positions occur. Audit Committee members shall be appointed by the Board and may be
removed by the Board at any time. The Board shall designate the Chairman of the Audit
Authority and Responsibilities
In addition to any other responsibilities which may be assigned from time to time
by the Board, the Audit Committee is responsible for the following matters.
· The Audit Committee has the sole authority to retain and terminate the
independent auditors of the Company (subject, if applicable, to shareholder
ratification), including sole authority to approve all audit engagement fees and
terms and all non-audit services to be provided by the independent auditors. The
Audit Committee shall pre-approve each such non-audit service to be provided by
the Company's independent auditors. The Audit Committee may consult with
management in the decision making process, but may not delegate this authority
to management. The Audit Committee may, from time to time, delegate its
authority to pre-approve non-audit services on a preliminary basis to one or more
Audit Committee members, provided that such designees present any such
approvals to the full Audit Committee at the next Audit Committee meeting.
· The Audit Committee shall review and approve the scope and staffing of the
independent auditors' annual audit plan(s).
· The Audit Committee shall evaluate the independent auditors' qualifications,
performance and independence, and shall present its conclusions and
recommendations with respect to the independent auditors to the full Board on at
least an annual basis. As part of such evaluation, at least annually, the Audit
· obtain and review a report or reports from the Company's independent
· describing the independent auditors' internal quality-control
· describing any material issues raised by (i) the most recent internal
quality-control review or peer review of the auditing firm, or (ii)
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, regarding one or more
independent audits carried out by the auditing firm; and any steps
taken to deal with any such issues;
· describing all relationships between the independent auditors and
the Company; and
· assuring that Section 10A of the Securities Exchange Act of 1934
has not been implicated;
· review and evaluate the senior members of the independent auditor
team(s), particularly the lead audit and reviewing partners;
· consider whether the lead audit or reviewing partner should be rotated
more frequently than is required by law, so as to assure continuing auditor
· consider whether the independent auditors should be rotated, so as to
assure continuing auditor independence; and
· obtain the opinion of management and the internal auditors of the
independent auditors' performance.
· The Audit Committee shall establish policies for the Company's hiring of current
or former employees of the independent auditors.
· At least annually, the Audit Committee shall evaluate the Company's internal audit
function and review the internal audit plan.
Financial Statements; Disclosure and Other Risk Management and Compliance Matters
· The Audit Committee shall review with management, the internal auditors and the
independent auditors, in separate meetings if the Audit Committee deems it
· the annual audited financial statements, including the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations", prior to the filing of the Company's
· the quarterly financial statements, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations", prior to the filing of the Company's Form 10-Q;
· any analyses or other written communications prepared by management,
the internal auditors and/or the independent auditors 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;
· the critical accounting policies and practices of the Company;
· related-party transactions and off-balance sheet transactions and
· any major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's
selection or application of accounting principles; and
· regulatory and accounting initiatives or actions applicable to the Company
(including any SEC investigations or proceedings).
· The Audit Committee shall review, in conjunction with management, the
Company's policies with respect to the Company's earnings press releases and all
financial information, such as earnings guidance, provided to analysts and rating
agencies, including the types of information to be disclosed and the types of
presentation to be made and paying particular attention to the use of "pro forma"
or "adjusted" non-GAAP information.
· The Audit Committee or its Chairman may review any of the Company's earnings
press releases as the Audit Committee or the Chairman deems appropriate.
· The Audit Committee shall, in conjunction with the CEO and CFO of the
Company, review the Company's internal controls and disclosure controls and
procedures, including whether there are any significant deficiencies in the design
or operation of such controls and procedures, material weaknesses in such
controls and procedures, any corrective actions taken with regard to such
deficiencies and weaknesses and any fraud involving management or other
employees with a significant role in such controls and procedures.
· The Audit Committee shall review and discuss with the independent auditors any
audit problems or difficulties and management's response thereto, including those
matters required to be discussed with the Audit Committee by the auditors
pursuant to Statement on Auditing Standards No. 61:
· any restrictions on the scope of the independent auditors' activities or
access to requested information;
· any accounting adjustments that were noted or proposed by the auditors
but were "passed" (as immaterial or otherwise);
· any communications between the audit team and the audit firm's national
office regarding auditing or accounting issues presented by the
· any management or internal control letter issued, or proposed to be issued,
by the auditors; and
· any significant disagreements between the Company's management and
the independent auditors.
· The Audit Committee shall review the Company's policies and practices with
respect to risk assessment and risk management, including discussing with
management the Company's major financial risk exposures and the steps that
have been taken to monitor and control such exposures.
· The Audit Committee shall establish procedures for:
· the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing
· the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
· The Audit Committee shall review any significant complaints regarding
accounting, internal accounting controls or auditing matters received pursuant to
· The Audit Committee shall prepare the audit committee report that Securities and
Exchange Commission rules require to be included in the Company's annual
Reporting to the Board
· The Audit Committee shall report to the Board periodically. This report shall
include a review of any issues that arise with respect to the quality or integrity of
the Company's financial statements, the Company's compliance with legal and
regulatory requirements, the qualifications, independence and performance of the
Company's independent auditors, the performance of the internal audit function,
compliance by the Company with legal and regulatory requirements and any other
matters that the Audit Committee deems appropriate or is requested to be included
by the Board.
· At least annually, the Audit Committee shall evaluate its own performance and
report to the Board on such evaluation.
· The Audit Committee shall periodically review and assess the adequacy of this
charter and recommend any proposed changes to the Nominating and Corporate
The Audit Committee shall meet as often as it determines is appropriate to carry
out its responsibilities under this charter, but not less frequently than quarterly. The
Chairman of the Audit Committee, in consultation with the other committee members,
shall determine the frequency and length of the committee meetings and shall set meeting
agendas consistent with this charter.
The Audit Committee shall meet separately, periodically, with management, with
internal auditors or other personnel responsible for the internal audit function and with
the independent auditors.
The Audit Committee is authorized (without seeking Board approval) to retain
special legal, accounting or other advisors and may request any officer or employee of
the Company or the Company's outside counsel or independent auditors to meet with any
members of, or advisors to, the Audit Committee.
The Audit Committee may delegate its authority to subcommittees or the
Chairman of the Audit Committee when it deems appropriate and in the best interests of
Limitations Inherent in the Audit Committee's Role
It is not the duty of the Audit Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate and are in accordance
with GAAP. This is the responsibility of management and the independent auditors.
Furthermore, while the Audit Committee is responsible for reviewing the Company's
policies and practices with respect to risk assessment and management, it is the
responsibility of the CEO and senior management to determine the appropriate level of
the Company's exposure to risk.