Audit Committee Charter
The purpose of the Audit Committee is to assist the Board of Directors in:
· its oversight of the Company's accounting and financial reporting principles, policies and internal controls and the performance of the internal audit function;
· its oversight of the quality and integrity of the Company's financial statements and the independent audit thereof;
· selecting, evaluating and, where deemed appropriate, replacing the Company's outside auditors;
· evaluating the independence, qualification and performance of the Company's outside auditors;
· evaluating the performance of the Company's internal auditors; and
· ensuring the Company's compliance with legal and regulatory requirements.
addition, the Audit Committee annually shall prepare the Audit Committee Report
required to be included in the Company's annual report and proxy statement by
applicable Securities and Exchange Commission ("SEC") rules.
While certain duties and responsibilities of the Audit Committee are more specifically set forth below, the general function of the Audit Committee is oversight. Management of the Company is responsible for the preparation, presentation and integrity of the Company's financial statements. In addition, management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.
Each member of the Audit Committee may rely on (a) the integrity of those persons and organizations within and outside the Company from which it receives information and (b) the accuracy of the financial and other information provided to the Audit Committee by such persons or organizations, in each case absent actual knowledge to the contrary (which shall be reported to the Board of Directors promptly).
The outside auditors for the Company ultimately are accountable to the Board of Directors and the Audit Committee. The outside auditors shall submit to the Audit Committee and the Company annually a formal written statement delineating all relationships between the outside auditors and the Company ("Statement as to
Audit Committee Membership
The Audit Committee shall consist of a least three Directors, all of whom shall have no relationship to the Company that may interfere with the exercise of their independence from management and the Company and shall otherwise satisfy the applicable membership and independence requirements under the rules of the New York Stock Exchange (the "NYSE"). Rule 10A-3(b)(1) under the Exchange Act and applicable law. All members of the Committee shall have a working familiarity with basic financial and accounting processes and one member shall be a "financial expert" according to the criteria set forth under Item 401(h) of SEC Regulation S-K.
The members of the Audit Committee shall be appointed at least annually by the Board of Directors on the recommendation of the Nominating and Governance Committee and may be replaced by the Board of Directors from time to time.
Each member of the Audit Committee should limit the number of public companies for which he or she serves as a member of the audit committee to no greater than three. If a member of the Committee serves on more than three public company audit committees, the Board shall evaluate whether such simultaneous service would impair the ability of such member to effectively serve on the Committee and will ensure that disclosure of such evaluation will be made in the Company's annual proxy statement as required by NYSE rules.
The Audit Committee shall hold at least four meetings per year and such additional meetings as the Audit Committee or its Chairperson shall determine.
In addition, the Audit Committee should meet separately and periodically with management, the Director of the internal audit department and the outside auditors to review and discuss the annual and quarterly reporting process and such other appropriate matters and to discuss any matters that the Audit Committee or any of those persons or firms believe should be discussed privately.
The Audit Committee may request any officer or employee of the Company or the Company's outside counsel or outside auditors to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee.
Committee Authority and Responsibility
To carry out its oversight responsibilities, the Audit Committee shall have the following duties and powers:
· With respect to the outside auditors, the Audit Committee shall:
o have sole authority to appoint, compensate, retain, oversee, evaluate and replace the Company's outside auditors including resolution of disagreements between management and the auditor regarding financial reporting) and to approve all audit services and audit engagement fees and terms and any non-audit engagements by the outside auditors;
o instruct the outside auditors that they report directly to the Committee;
o at least annually, review the services proposed to be rendered to the Company by the outside auditors, including the nature, type and scope of services contemplated and the related fees to be rendered by the firm during the year, and approve the appropriate services and fees;
o review and, as appropriate, pre-approve those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee.
o annually evaluate the outside auditor's qualifications, performance and independence, including that of the lead audit partner for the Company's account, taking into account the opinions of management and the Company's internal auditors;
o ensure regular rotation of the lead partner on the Company's account as required by applicable SEC regulation and consider whether regular rotation of the outside audit firm is appropriate;
o ensure that the outside auditors prepare and deliver annually the Statement as to Independence (it being understood that the outside auditors are responsible for the accuracy and completeness of this Statement), actively engage the outside auditors in a dialogue with respect to any relationships or services disclosed in this Statement that may impact the objectivity and independence of the Company's outside auditors and take appropriate action to satisfy itself of the outside auditors' independence;
o meet with the outside auditors to discuss the planning and staffing of the annual audit and the results of their examination and their evaluation of internal controls and the overall quality of financial reporting;
o approve in advance any non-audit services that are proposed to be furnished to the Company by the Company's outside auditors as permitted by law and review the disclosure of such arrangements in the Company's periodic reports;
o set clear hiring policies for employees or former employees of the Company's outside auditors; and
o review with the outside auditor any audit problems or difficulties, including any restrictions on the scope of the outside auditor's activities or access to requested information and any significant disagreements with management, and management's response; and
o at least annually, obtain and review a report by the independent auditor describing: (i) the firm's internal quality-control procedures; (ii) 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 (iii) any steps taken to deal with any such issues and (iv) (to assess the auditor's independence) all relationships between the auditors and the Company.
· With respect to the internal audit department, the Audit Committee shall:
o appoint and/or replace the director of the internal audit department and maintain a direct reporting line to the Audit Committee. The director of the internal audit department shall maintain an administrative reporting line to the Chief Financial Officer;
o advise the director of the internal audit department of requirements to provide to the Audit Committee summaries of and, as appropriate, the complete internal audit department reports along with management's responses thereto; and
o discuss with the outside auditors the internal audit department's responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
· With respect to financial reporting principles and policies and internal audit controls and procedures, the Audit Committee shall:
o advise management, the internal audit department and the outside auditors that they are expected to provide to the Audit Committee a timely analysis of significant financial reporting issues and practices;
o meet with the outside auditors, with and without representatives of management and the internal audit department present, to:
§ discuss the scope of the annual audit;
§ discuss the Company's annual and quarterly financial statements prior to filing, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as the results of the outside auditor's review of the annual and quarterly financial statements;
§ review and discuss the Company's press releases, including the type and presentation of information to be included (paying particular attention to any use of pro forma or adjusted non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies;
§ discuss any other significant matters arising from any audit or report or communication above, whether raised by management, the internal audit department or the outside auditors, relating to the Company's financial statements;
§ review and discuss material off-balance sheet transactions;
§ confirm that there are no material non-compliance issues with SEC reporting requirements that would require accounting restatements of special disclosures;
§ discuss the effect of regulatory accounting initiatives and off-balance sheet structures on the Company's financial statements;
§ discuss significant changes to the Company's auditing and accounting principles, policies, controls, procedures and practices proposed or contemplated by the outside auditors, the internal audit department or management;
§ discuss guidelines and policies with respect to risk assessment and risk management and inquire about significant risks and exposures, if any, and the steps taken to monitor and minimize such risks; and
§ review the form of opinion the outside auditors propose to render to the Board of Directors and shareholders;
§ recommend to the Board of Directors whether the audited financial statements should be included in the Company's Form 10-K;
§ obtain from the outside auditors assurance that the audit was conducted in a manner consistent with prior years and in accordance with generally accepted accounting principles and regulatory requirements; and
§ discuss with the Company's counsel any legal matters that may have a material effect on the financial statements or the Company's compliance policies, including materials notices to or inquiries received from governmental agencies.
With respect to reporting, the Audit Committee shall:
§ review and approve the Company's Code of Ethics for its senior officers as required by SEC rules;
§ obtain reports from management, the Company's internal audit department and the outside auditor that the Company and its subsidiaries and foreign 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 its senior officers and advise the Board of Directors 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 Code of Ethics for senior officers;
§ review the Company's compliance and ethics programs at least annually
§ review reports and disclosures of insider and affiliated party transactions and waivers of the Code of Ethics for the Company's senior officers; and
§ review this Charter at least annually and recommend any changes to the full Board of Directors.
§ The Audit Committee shall meet separately, periodically, with the Company's management, internal auditors and outside auditors.
§ The Audit Committee shall establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Company or any interested parties, of concerns regarding questionable accounting or auditing matters via a designated confidential e-mail address or the Teletip Hotline.
§ The Audit Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority and necessary funds to engage outside auditors for special audits, reviews and other procedures and to retain special counsel and other experts or consultants as it determines necessary to carry out its duties.
§ The Audit Committee shall conduct an annual self-performance evaluation.
Reports of the Committee
At each regular meeting of the Board of Directors, the Committee shall report the substance of all actions taken by the Committee since the date of its last report to the Board of Directors. Each report shall be filed with the minutes of the Board of Directors to which it is presented, as a part of the corporate records.