CHARTER OF THE AUDIT COMMITTEE
2003 Committee Charter : VARI
OF THE BOARD OF DIRECTORS
OF VARIAN, INC.
(as amended and restated on November 10, 2003)
I. Committee Purpose
The primary purpose of the Audit Committee (the "Committee") of the Board of Directors of Varian, Inc. (the "Company") is to oversee the Company's accounting and financial reporting processes and the audits of the Company's financial statements.
II. Committee Composition and Meetings
The Committee shall have a minimum of three members, each of whom shall be a member of the Board of Directors and meet the qualification and independence requirements of The Nasdaq Stock Market, Inc. and applicable law. Members of the Committee shall be appointed by and serve at the discretion of the Board of Directors, which shall also appoint the Committee's Chairman.
The Committee shall meet regularly as necessary to fulfill its responsibilities. Special meetings may be called by the Chairman of the Committee or the Chairman of the Board. The Committee may also take action by unanimous written consent of its members. The Committee may delegate any of its responsibilities to a subcommittee comprised solely of a member or members of the Committee. At any meeting of the Committee or a subcommittee of the Committee, the presence of one-half of its members then in office shall constitute a quorum for the transaction of business; and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of the Committee or subcommittee.
Except as the Committee may otherwise decide in its discretion, Committee meetings shall be attended by the Company's Chief Executive Officer, Chief Financial Officer, Controller, Internal Audit Director and General Counsel and a representative of the Company's independent accountants. The Committee may request that any other director, officer or employee of the Company or any of the Company's external legal counsel, independent accountants, compensation consultants or other consultants or advisors attend a Committee meeting or meet with any member of the Committee or its advisors. The Committee shall have the authority to retain and terminate, at the Company's expense, legal counsel, accountants or other consultants or advisors, as the Committee determines necessary to carry out its duties. The Committee may meet with any person in executive session, and shall meet in executive sessions as directed below.
III. Committee Responsibilities
A. Independent Accountants. The Committee shall:
1. Be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged (including resolution of disagreements between management and the 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 each such registered public accounting firm shall report directly to the Committee, all as and to the extent required under applicable rules of The Nasdaq Stock Market, Inc. or SEC rules;
2. Be directly responsible for resolution of any disagreements between the Company's management and the independent accountants;
3. Approve in advance any audit, audit-related and non-audit services to be provided to the Company by the independent accountants;
4. Approve in advance the independent accountants' audit plan and audit services;
5. Review and confirm the independent accountants' independence from the Company, including by (a) obtaining from the independent accountants a formal written statement delineating all relationships between the independent accountants and the Company, consistent with Independence Standards Board Standard 1, (b) discussing with the independent accountants any disclosed relationships or services that might impact the independent accountants' objectivity and independence, and (c) reviewing at least annually fees paid to the independent accountants for audit and non-audit services;
6. Evaluate regularly the independent accountants' performance;
7. Receive from the independent accountants timely reports on (a) all critical accounting policies and practices to be used, (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with the Company's management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountants, and (c) other material written communications between the independent accountants and the Company's management, such as any management letter or schedule of unadjusted differences;
8. Review regularly with the independent accountants the quality of the Company's accounting and reporting principles and practices and any significant issues;
9. Review regularly with the independent accountants significant accounting developments and pronouncements; and
10. Meet regularly in executive session with a representative of the Company's independent accountants.
B. Internal Audit. The Committee shall:
1. Be responsible for the oversight of the Company's internal audit function, including its organization, activities and effectiveness;
2. Approve the Company's internal audit plan and receive reports on a regular basis regarding progress against that plan;
3. Review significant issues raised in the internal audit program, and any matters involving fraud, illegal acts or significant deficiencies in internal controls; and
4. Meet regularly in executive session with the Company's Internal Audit Manager or Director.
C. Financial Reporting. The Committee shall:
1. Review with management and the independent accountants significant financial reporting issues, among other items recent professional and regulatory pronouncements, revenue recognition, significant reserves, off-balance sheet items, the impact of derivative transactions and special-purposes entities;
2. Approve all related-party transactions (as defined by rules of The Nasdaq Stock Market, Inc.) between the Company or any its subsidiaries and any Company directors or nominee for director, Company executive officer, beneficial owner of more than five percent of the Company's outstanding securities, or members of the immediate family of any of the foregoing persons;
3. Review in advance with the Company's management and independent accountants the quarterly press release reporting the Company's financial results;
4. Review with the Company's management and independent accountants the audited financial statements to be included in the Company's Annual Reports on Form 10-K (or the Annual Report to Stockholders if distributed prior to the filing of the Form 10-K), including the selection, application and disclosure of critical accounting policies and other significant issues and items, and the matters required to be discussed by Statement of Auditing Standards No. 61, Communications with Audit Committees; and
5. Review with the Company's management and independent accountants the interim financial data to be reported in the Company's Quarterly Reports on Form 10-Q, including the selection, application and disclosure of critical accounting policies and other significant issues and items, and the matters required to be discussed by Statement of Auditing Standards No. 61, Communications with Audit Committees, and recommend to the Board of Directors whether the Company's audited financial statements should be included in the Company's Annual Report on Form 10-K.
D. Other Responsibilities. The Committee shall:
1. 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 submissions by employees regarding questionable accounting or auditing matters;
2. Review with the Company's General Counsel legal matters that could have a significant impact on the Company's financial statements or results of operations;
3. Approve in advance the engagement of any independent accountants other than the Company's principal independent accountants to perform statutory audit services.
4. Review at least annually the adequacy of this Charter, and recommend to the Board of Directors any proposed changes to this Charter;
5. Prepare the report of the Committee required to be included in the Company's annual proxy statement; and
6. Perform other responsibilities as directed by the Board of Directors.