Audit Committee Charter
(As revised and approved by the Board of Directors
Address complaints and concerns regarding accounting or auditing matters brought to the attention of the Committee by Company personnel.
Review and reassess the adequacy of this Charter annually with the assistance of the Company’s outside counsel and recommend any proposed changes to the Board for approval.
Advise financial management and the independent auditor they are expected to provide a timely analysis of significant new financial reporting issues and practices and to provide any reports required by the Act.
Inquire of management and the independent auditor about significant risks or exposures and assess the steps management has taken to minimize such risks to the Company.
Meet periodically with the independent auditor, the Chief Financial Officer and other members of management in separate executive sessions to discuss any matter that the Committee or these groups believe should be discussed privately with the Audit Committee.
Report periodically to the Board of Directors on significant results of the foregoing activities.
Appoint, compensate and oversee the Company’s independent auditor and resolve any disagreements between management and the auditor regarding financial reporting. If so determined by the Audit Committee, replace the independent auditor.
Instruct the independent auditor that the Act requires the auditor to report directly to the Committee.
Review and approve in advance all related-party transactions, all audit services to be provided by the independent auditor, and (to the extent pre-approval is not waived under the Act) all permitted non-audit services.
Monitor the independence of Committee members to ensure compliance with the Nasdaq Rules and the Act.
Continuous Activities - Specific Tasks
Review the experience and qualifications of the senior members of the independent auditor team and the quality control procedures of the independent auditor. Confirm that neither the lead or coordinating audit partner nor the primary reviewing partner of the independent auditor has performed audit services for the Company for the previous five consecutive years.
Meet with the independent auditor prior to the audit to review the planning and staffing of the audit and approve the services to be provided by the independent auditor in connection with the audit.
Meet quarterly or more frequently as circumstances require to review with management and the independent auditor the Company’s quarterly financial statements prior to the public release of the Company’s quarterly earnings press release and the filing of its Form 10-Q, including the results of the independent auditor’s reviews of the quarterly financial statements.
Consider and review with management including the Chief Financial
Officer and with the independent auditor:
Any difficulties encountered in the course of audit work, including any restrictions on the scope of activities or access to required information and any disagreements with management.
Any changes required on the planned scope of the audit.
An analysis of the effect of alternative GAAP methods on the Company’s financial statements and a description of any transactions as to which management obtained Statement on Auditing Standards No. 50 letters.
The effect of regulatory and accounting initiatives on the Company’s financial statements.
Any material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.
The management’s and the independent auditor’s 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 on an annual basis.
Any material correcting adjustments that have been identified by the independent auditor in accordance with GAAP and the SEC’s rules and regulations.
Other matters related to the conduct of the audit which are to be communicated to the audit committee under generally accepted auditing standards.
Determine, with regard to new transactions or events, the auditor’s reasoning for the appropriateness of the accounting principles and disclosure practices adopted by management.
Review the independent auditor’s report required by the Act, describing (i) all critical accounting policies and practices to be used, (ii) all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent auditor, and (iii) other material written communications between the auditor and management, such as any management letter or schedule of unadjusted differences.
Pursuant to the Act, review quarterly with the Chief Executive Officer and Chief Financial Officer (i) any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data, and (ii) any fraud, whether or not material, involving management or other employees who have a significant role in the Company’s internal controls.
Review with management and the independent auditor the internal control assessment and report to be included in the Company’s 10-K as required by the Act.
Assure that the auditor’s reasoning is described in accepting or questioning significant estimates by management.
Inquire as to the auditor’s views about whether Company’s choices of accounting principles are conservative, moderate, or aggressive from the perspective of income, asset, and liability recognition, and whether those principles are common practices.
Review with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies.
Inquire as to the auditor’s views about how the Company’s choices of accounting principles and disclosure practices may affect members and public views and attitudes about the Company.
Review and approve in advance the retention of the independent auditor for any non-audit service that is not prohibited by the Act, provided, however, that (a) permitted non-audit services that account for less than $10,000 shall be deemed to be pre-approved, and (b) as permitted by Section 302 of the Act, such pre-approval is waived and shall not be required with respect to non-audit services (i) that account, in the aggregate, for less than 5% of the total fees paid by the Company to its independent auditor during the fiscal year in which such non-audit services are provided, (ii) that the Company did not recognize as “non-audit” services at the time of the engagement, and (iii) that are promptly brought to the attention of, and approved by, the Committee before the completion of the audit (and such approval may be given by the Audit Committee or any member of the Audit Committee). The Audit Committee may delegate to any one of its members the authority to grant pre-approval of any permitted non-audit services that account for between $10,000 and $20,000 (and except as otherwise provided in a resolution of the Audit Committee adopted hereafter, the Audit Committee shall be deemed to have delegated such authority, such that any one member of the Audit Committee shall have the authority to grant pre-approval of any permitted non-audit services within such dollar limits). The pre-approval of any non-audit services pursuant to delegated authority or deemed approval shall be reported to the full Audit Committee at its next scheduled meeting. Approval of non-audit services to be performed by the independent auditor pursuant to section 13(b) hereof will be disclosed by the Company as required pursuant to Section 202 of the Act in the applicable reports filed with the SEC.
Prior to the Company hiring employees of the independent auditor who were engaged on the Company’s account, recommend to the Board guidelines for the Company’s hiring of such employees of the independent auditor, bearing in mind the restrictions of the Nasdaq Rules and the Act regarding auditor conflicts of interest.
Assist the Board in the development and review of a code of ethics for the Company’s senior financial officers that complies with the Act and the Nasdaq Rules.
Arrange for the independent auditor to be available to the full Board of Directors, at least annually, to help provide a basis for the Board to provide input to the Committee regarding the retention or dismissal of the auditor.
Review periodically with general counsel, legal and regulatory matters that may have a material impact on the Company’s financial statements, compliance policies and programs.
Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.
While the Audit Committee has the
responsibilities and powers set forth in this Charter, 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 generally accepted accounting principles. The accuracy of the
financial statements is the responsibility of management. The conduct of an
audit in accordance with auditing standards generally accepted in the
AUDIT COMITTEE CHARTER