AUDIT COMMITTEE CHARTER
The Audit Committee (ďCommitteeĒ) is responsible for matters relating to the
auditing of the Corporation and its subsidiaries. The Committee is appointed by
the Board to prepare the report included in the annual proxy statement and to
assist the Board in oversight of (1) the integrity of the Corporationís
financial statements, (2) the Corporationís compliance with legal and regulatory
requirements, (3) the independent auditorsí qualifications and independence,
and (4) the performance of the Corporationís internal audit function and
The Committee shall prepare the report that the Securities and Exchange Commission
(ď SEC Ē) rules require to be included in the
Corporationís annual proxy statement.
- The Committee shall be made up of at least 3
members all of whom shall meet the independence and experience
requirements of the New York Stock Exchange, Section 10A(m)(3) of the
Securities Exchange Act of 1934 and the rules and regulations of the SEC .
Committee members shall not simultaneously serve on the audit committees
of more than two other public companies.
- All Committee members must be able to read and
understand fundamental financial statements, including a balance sheet,
income statement and cash flow statement.
- In addition, one member of the Committee must be
a financial expert as defined by the SEC .
- The members of the Committee shall be appointed
by the Board on the recommendation of the Nominating and Governance
Committee. Committee members may be replaced by the Board.
- The Committee shall meet as often as it
determines, but not less frequently than quarterly.
- The Committee shall meet periodically with
management, the internal auditors and the independent auditors in separate
- The Committee may request any officer or
employee of the Corporation or the Corporationís outside counsel or
independent auditors to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.
DUTIES AND RESPONSIBILITIES
Relationship with the Independent Auditors:
- The Committee has the sole authority to approve
all audit engagements, services, fees and terms, as well as all
significant non-audit engagements with the independent auditors. The
Committee may obtain the input of management, but may not delegate this
responsibility to management.
- The independent auditors
report directly to the Committee.
- The Committee must pre-approve
all audit and non-audit services to be performed by the independent
- At least annually, the Committee must obtain and
review a report by the independent auditors describing: the firmís
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 any steps taken to deal with any such issues;
and (to assess the auditorsí independence) all relationships between the
independent auditors and the Corporation.
- After review, the Committee
will be in a position to evaluate the auditorsí qualifications,
performance and independence. This review should include the review and
evaluation of the lead partner of the independent auditors. The Committee
should take into account the opinions of management and the Corporationís
- In addition to assuring the
regular rotation of the lead audit partner as required by law, the
Committee should further consider whether, in order to assure continuing
auditor independence, there should be regular rotation of the audit firm
itself. Conclusions should be presented to the full Board.
- Review with the independent auditors any audit
problems or difficulties and managementís response, and other material
written communications between the independent auditors and management
including disagreements between management and the independent auditors
regarding financial reporting.
- Review and discuss the responsibilities, budget
and staffing of the Corporationís internal audit function.
- Recommend to the Board policies for the
Corporationís hiring of employees or former employees of the independent
auditors who participated in any capacity in the audit of the Corporation,
which prohibit an auditing firm from providing audit services to a company
whose CEO, CFO or Chief Accounting Officer was employed by the auditing
firm and participated in the companyís audit in any capacity within one
year of audit initiation.
- Obtain from the independent auditors assurance
that the independent auditors have not become aware of any illegal acts
and if they have, to provide a report to the Committee regarding specified
conclusions with respect to such illegal acts.
The Committee shall review and discuss:
- The annual consolidated financial statements and
quarterly consolidated financial statements with management and the
independent auditors, including the narrative under ďManagementís
Discussion and Analysis of Financial Condition and Results of OperationsĒ:
- The Committee should review
with the full board any issues that arise with respect to the quality or
integrity of the Corporationís financial statements, the Corporationís
compliance with legal or regulatory requirements, the performance and
independence of the Corporationís independent auditors, or the
performance of the internal audit.
- Discuss with management and
the independent auditors any correspondence with regulators or
governmental agencies and published reports, which raise material issues
regarding the Corporationís financial statements or accounting policies.
- Discuss with the Corporationís
General Counsel and other appropriate senior officers, legal matters that
may have a material impact on the financial statements or the
Corporationís compliance policies.
- Earnings press releases, as well as financial
information and earnings guidance provided to analysts and rating
- Major issues regarding accounting principles and
practices to be used and financial statement presentations including any
significant changes in the Corporationís selection or application of
accounting principles, and major issues as to the adequacy of the
Corporationís internal controls and any special audit steps adopted in
light of material control deficiencies.
- Analyses prepared by
management and/or the independent auditors setting forth significant
financial reporting issues and judgments made in connection with the
preparation of the financial statements including effects of alternative
generally accepted accounting principles (GAAP) methods.
- Disclosure of all accounting
policies and practices to be used by the independent auditors, and all
alternative treatments of financial information within generally accepted
accounting principles discussed with management,
- The ramifications of these
alternative treatments, and
- The treatment preferred by
the independent auditors.
The effect of regulatory and accounting
initiatives as well as off-balance sheet structures on the financial statements
of the Corporation.
- Policies, procedures, and a review of the
results of the Corporationís internal audit function.
- Discuss with management the Corporationís major
financial risk exposures and the steps management has taken to monitor and
control such exposures, including the Corporationís risk assessment and risk
- Disclosures made to the Committee by the
Corporationís CEO and CFO during their certification process for the Form
10-K and Form 10-Q about any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and any
fraud involving management or other employees who have a significant role
in the Corporationís internal controls.
- The Committee shall have the authority and the
appropriate funding to engage independent counsel and other advisors as
necessary to carry out its duties (without seeking Board approval). This
funding shall be provided by the Corporation.
- The Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including
the authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full Committee at its next
- The Committee shall perform an annual
performance evaluation of itself.
- The Committee shall review the adequacy of this
- The Committee shall put into place procedures
for receiving accounting complaints and concerns. This includes procedures
for receiving anonymous complaints from employees.
OF AUDIT COMMITTEE'S ROLE
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Corporationís financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent auditors.