Charter of the Audit Committee of the Board of Directors
The Board of Directors of the Company has
established the Audit Committee of the Board whose activities shall be governed
by this Charter.
Committee's function is to assist the Board in fulfilling its oversight
responsibilities relating to the Company's corporate accounting and financial
reporting practices. In fulfilling this function, the Audit Committee's primary
duties and responsibilities are to:
- Serve as an independent and objective party to
oversee the integrity of the Company's financial statements and to
monitor the Company's financial reporting process and systems of internal
controls regarding financial, accounting, and legal compliance.
- Monitor the independence and performance of the
Company's independent auditor and internal auditing function.
- Provide an avenue of communication among the
independent auditor, management, the internal auditing function, and the
- Report actions of the Audit Committee to the
Board with such recommendations as the Audit Committee may deem
The Audit Committee
shall consist of at least three members, all of whom must be members of the
Board. To the extent required by the NASDAQ, at least one of the members shall
have accounting or related financial management expertise as set forth in the
applicable rules of the NASDAQ.
Committee member shall satisfy the independence and knowledge requirements, as
amended from time to time, of (1) the NASDAQ applicable to the Company,
(2) Section 10A(m)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules and regulations
promulgated by the Securities and Exchange Commission and (3) the Global
Industries, Ltd. Corporate Governance Guidelines. Audit Committee members shall
be appointed by the Board based on the recommendations of the Company's
Nominating & Governance Committee. The chairperson of the Audit Committee
shall be the member so designated by the Board or if no such designation is
made, shall be selected from its members by affirmative vote of the majority of
Audit Committee. Audit Committee members may be removed or replaced at any time
by the Board.
- Authority and Responsibilities
Committee shall be directly responsible for the appointment, compensation,
retention and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Audit Committee who shall have full authority to terminate the independent
Committee shall pre-approve all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed for the Company
by its independent auditor, subject to the de minimus
exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 which are
approved by the Audit Committee prior to the completion of the audit. The Audit
Committee may form and delegate authority to the Chairperson of the Audit
Committee or 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 the decisions of the Chairperson or such subcommittee
to grant pre-approvals shall thereafter be presented to the full Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain independent legal, accounting or other advisors. The
Company shall provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report and to any advisors employed by
the Audit Committee. The Committee shall be empowered to conduct or cause to be
conducted any investigation appropriate to fulfilling its responsibilities, and
shall have direct access to the independent auditor as well as Company
employees as necessary.
the generality of the preceding statement, the Audit Committee, to the extent
it deems necessary or appropriate, shall:
- Review and discuss with management and the
independent auditor, the Company's year-end financial results prior to
the release of earnings and the Company's annual audited financial
statements prior to filing or distribution. Such review of the audited
financial statements shall also include review of the Company's SEC filings
and disclosures particularly under the related "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." Recommend to the Board whether or not the audited
financial statements should be included in the Company's Annual Report on
Form 10-K for the last fiscal year.
- Review and discuss with management and the
independent auditor, the Company's quarterly financial results prior to
the release of earnings and the Company's quarterly financial statements
prior to filing or distribution. Such review of the quarterly financial
statements shall also include review of the Company’s SEC filings and
disclosures particularly under the related "Management’s Discussion
and Analysis of Financial Condition and Results of Operations."
- Discuss with management and the independent
auditor significant financial reporting issues and judgments made in
connection with the preparation of the Company’s financial statements,
including any significant changes in the Company’s selection or
application of accounting principles, any major issues as to the adequacy
of the Company’s internal controls and any special audit steps adopted in
light of material control deficiencies.
- Review and discuss quarterly reports from the
independent auditor on:
critical accounting policies and practices to be used;
· all alternative treatments of
financial information within generally accepted accounting principles
("GAAP") that have been discussed with Management, the ramifications
of the use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor; and
material written communications between the independent auditor and management,
such as any management letter or schedule of unadjusted differences.
- Discuss with the independent auditor the
matters required to be discussed by Statement on Auditing Standards No.
61 relating to the conduct of their audit, including any problems or
difficulties encountered in the course of the audit work and management’s
response, any restrictions on the scope of activities or access to
requested information, and any significant disagreements with management.
- Review disclosures made to the Audit Committee
by the Company’s 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 Company’s internal controls and procedures for financial
- Discuss with management and the independent
auditor the effect of regulatory and accounting initiatives as well as
off-balance sheet structures on the Company’s financial statements.
- In consultation with management, the independent
auditor, and the internal auditors, consider the
integrity of the Company's financial reporting processes and controls
including computerized information system controls and security. Discuss
significant financial risk exposures and the steps management has taken
to monitor, control, and report such exposures.
- Review and discuss with management all
financial information and earnings guidance provided by the Company. Such
discussions may be done generally (consisting of discussing the types of
information disclosed and presentations made) and need not precede each
instance in which the Company provides guidance.
- Recommend to the Board policies for hiring of
any employee or former employee of the independent auditor.
- Review and periodically recommend modifications
to the Company’s Code of Ethics for Senior Financial Officers.
- Annually evaluate the performance of the Audit
Committee and submit itself to the review and evaluation by the Board or
a committee it designates.
- At least annually, obtain and review a report
by the independent auditor describing: the firm's internal
quality-control procedures; 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 any steps taken to deal with any such
issues; and (to assess the auditor's independence) all relationships
between the independent auditor and the Company. Such review shall also
include the evaluation of the lead partner of the independent auditor and
ensuring the periodic rotation of the lead audit partner and the reviewing
partner as required by law.
Relationship with Independent Auditor
- At least annually, evaluate the qualifications,
performance and independence of the independent auditor by, among other
things, (1) receiving from the independent auditor a formal written
statement delineating all relationships between the independent auditor
and the Company, consistent with Independence Standards Board Standard
No. 1, that could impair the auditors' independence; (2) actively
engaging in a dialogue with the independent auditor with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the accountants; (3) recommending to the Board the
appropriate action to be taken in response to the independent auditor's report
to satisfy itself of the independent auditor's independence and
(4) considering whether the auditor’s quality controls are adequate
and the provision of permitted non-audit services is compatible with
maintaining the auditor’s independence, and taking into account the
opinions of Management and the internal auditors. The Audit Committee
shall present its conclusions with respect to the independent auditor to
- Prior to each audit, review the independent
auditor’s audit plan and engagement letter and discuss with the
independent auditor and the internal auditor the scope of the audit,
staffing, locations, reliance upon management, and internal audit and
general audit approach.
Internal Audit Department and Legal Compliance
- Review and discuss with the Company’s
independent auditor and senior management the budget, plan, changes in
plan, activities, organizational structure and staffing, and
qualifications of the internal audit function. The internal audit
function shall be responsible to senior management, but shall have a
direct reporting responsibility to the Board through the Committee.
- Review the appointment, performance, and
replacement of the senior internal auditor or at the Board’s discretion,
select and contract with an outside auditor (other than the Company’s
independent auditor) to perform all or any specified portion of the
internal audit function the entity retained to provide internal audit.
- Review a summary of findings from completed
internal audits and, where appropriate, review significant reports
prepared by the internal audit department together with management's
response and follow-up to these reports.
- Review with the General Counsel the results of
his/her review of the Company's compliance with the Company's Code of
- On at least an annual basis, review with the
Company's legal counsel any legal matters, including inquiries received
from regulators or governmental agencies, that could have a significant
impact on the Company's financial statements or the Company's compliance
with applicable laws and regulations.
- Discuss with management and the independent
auditor any published reports which raise material issues regarding the
Company’s financial statements, accounting procedures or compliance
- Obtain from the independent auditor assurance
that Section 10A(b) of the Securities Exchange
Act of 1934 has not been implicated.
- Establish procedures to review and approve all
related party transactions to the extent required by the rules of the
- Establish procedures to (i) receive, retain and treat complaints received
regarding accounting, internal accounting controls or auditing matters
and (ii) the confidential and anonymous submission by employees of
concerns regarding questionable accounting or audit practices.
- Review and reassess the adequacy of this
Charter at least annually and recommend any proposed changes to the Board
- Annually prepare a report to shareholders as
required by the Securities and Exchange Commission to be included in the
Company's annual proxy statement.
- Regularly report to the Board on significant
results of its activities and recommendations.
- Perform any other activities consistent with
this Charter, the Company's articles of incorporation by-laws, the rules
of the NASDAQ and governing law, as the Committee or the Board deems
necessary or appropriate.
While the Audit Committee has the
responsibilities and authority set forth by 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 and disclosures are complete and accurate or in
accordance with generally accepted accounting principles. These are the
responsibility of Management and the independent auditor.
Committee shall meet at the call of its chairperson, two or more of its
members, or the Chairman of the Board. The Audit Committee shall meet at least
quarterly, and at other times as the chairperson, the Chairman of the Board or
two or more members shall determine is warranted. The Audit Committee shall
meet in separate private executive sessions periodically but at least annually
with senior management, the internal auditors (and/or any outside auditor performing
the function of internal audit) and the independent auditor as well as a
committee to discuss matters that the members or any of these groups believe
should be discussed in executive session. Meetings may, at the discretion of
the Audit Committee, include members of the Company’s management, independent
consultants, and such other persons as the Audit Committee or its chairperson
may determine. The chairperson of the Audit Committee will preside at each
meeting and, in consultation with the other members of the Audit Committee,
will set the length of each meeting and the agenda of items to be addressed at
each meeting. The agenda for each meeting shall be circulated to each Audit
Committee member in advance of the meeting. The Audit Committee may meet in
person, by telephone conference call, or in any other manner in which the Board
is permitted to meet under law or the Company’s bylaws.
4.2 Quorum and Approval
A majority of the
members of the Audit Committee shall constitute a quorum. The Audit Committee
shall act on the affirmative vote of a majority of members present at a meeting
at which a quorum is present. The Audit Committee may also act by unanimous
written consent in lieu of a meeting.
Committee may determine additional rules and procedures, including designation
of a chairperson pro tempore in the absence of the chairperson or a secretary
of the Audit Committee in each case for any meeting thereof.
Each member of the
Audit Committee shall be paid the fee set by the Board for his or her services
as a member of, or chairperson of, the Audit Committee.