2003 Committee Charter : CIENCIENA CORPORATION
CHARTER OF THE
The Audit Committee (the "Committee") is a committee of the Company's Board of Directors (the "Board"). Its mission is to assist the Board in fulfilling its oversight responsibilities by assessing and monitoring the Company's financial information, potential financial, legal and regulatory exposures, systems of internal controls and the independent audit process.
The Committee shall be elected by the Board of Directors and shall consist of at least three Directors (including a Committee Chairman) all of whom shall be "independent" as defined by federal securities law and the listing requirements of the Nasdaq Stock Market and any securities exchanges on which the Company's securities are listed. The duties and responsibilities of a member of the Committee are in addition to those duties assumed as a member of the Board of Directors. At least one member of the Committee shall have a financial/accounting background and qualify as an "expert" in accounting matters as defined by the Securities and Exchange Commission.
The Committee shall meet at least four times per year (usually in conjunction with regularly scheduled meetings of the Board of Directors) and shall maintain minutes of each meeting. In addition to the members of the Committee, the Company's Chief Executive Officer, Chief Financial Officer, Controller and independent public accountants shall attend all regular meetings of the Committee. Other persons may be invited to attend as appropriate. During each of the regular meetings, the Committee members shall meet separately with the Company's independent public accountants with no members of management present. The Committee shall report to the Board on the major items covered at each Committee meeting and shall make recommendations to the Board and management as appropriate.
Appoint and establish the compensation of the Company's independent auditors, and oversee their work.
Approve in advance all audit and non-audit services to be performed by the Company's independent auditors, unless Committee approval is not required by applicable laws, rules or regulations.
Resolve disagreements between management and the Company's independent public accountants regarding financial reporting.
Facilitate communication between the independent public accountants and the Board.
At least annually review and approve the procedures established by the Company for collecting and processing information required to be included in its periodic reports filed with the Securities and Exchange Commission.
Periodically review and discuss with management and the independent public accountants the Company's selection, application and disclosure of critical accounting policies, any significant changes in the Company's accounting policies and any proposed changes in accounting or financial reporting that may have a significant impact on the Company. When appropriate, the Committee will consider the effect of alternative GAAP methods on the Company's financial statements.
Oversee financial reporting processes of the Company with a view to the fulfillment of its responsibilities for the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles and SEC regulations.
Review the Company's annual report on Form 10-K and discuss it with management and the Company's independent public accountants prior to its filing with the SEC.
Review legal, environmental and regulatory matters that may have a material impact on the Company's financial statements or operations.
Oversee the accounting processes of the Company including the maintenance of adequate systems of internal controls encompassing management information systems, computer systems, security, disaster recovery and a code of business conduct. In addition, review compliance with these controls as well as significant proposed changes.
Assess with management and the independent public accountants significant risks and exposures and evaluate measures management has implemented to reduce such risks.
Review with the Company's Chief Financial Officer and the independent public accountants the audit scope and audit plan of the independent public accountants.
Review with management and the independent public accountants at the completion of the annual audit:
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- The Company's annual financial statements and related footnotes.
- The independent public accountant's audit of the Company's financial statements and the report thereon including recommended changes in reporting policies or internal controls.
- Any significant changes required in the independent public accountant's audit plan.
- Any significant difficulties or disputes with management during the course of the audit.
- Other matters related to the audit which are to be communicated to the Committee under generally accepted auditing standards.
Review with the Board of Directors the results of the annual audit including the scope, effectiveness and cost of the audit.
Review, confirm and assure the independence of the independent accountants by reviewing non-audit services performed by external accountants.
Review the cost of audit and non-audit services performed by the independent accountants.
Discuss with the Chief Financial Officer and the independent accountants their qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and financial disclosure practices used or proposed to be adopted by the Company and particularly, about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates.
Establish procedures for (i) processing complaints regarding accounting, internal controls or auditing matters and (ii) confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters.
Report Committee actions to the Board of Directors with such recommendations as the Committee may deem appropriate.
At least annually, review and update the Committee's Charter.
The Committee shall perform such other functions as required the Company's charter or bylaws, the Board of Directors or applicable laws, rules and regulations, including the rules of the SEC and the NASDAQ stock exchange.
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The Committee shall have the power to conduct or authorize investigations into any matters within the Committee's scope of responsibilities.
The Committee shall be empowered to retain independent counsel, accountants or others to the extent the Committee considers necessary to carry out its duties. The Company will pay the expenses associated with all advisors to the Committee.
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