LaBarge, Inc.

Adopted by the Board of Directors April 28, 2004


The Audit Committee (“Committee”) will have responsibility to (i) assist the Board of Directors in fulfilling its oversight responsibilities with respect to the integrity of the Company’s financial statements, the independent auditors’ qualifications, independence and performance, the system of internal controls, the audit process and the Company’s process for monitoring compliance with laws and regulations related to financial reporting, and the Company’s Corporate Code of Conduct; and (ii) prepare the Committee report required to be included in the Company’s annual proxy statement. The Committee shall maintain a free and open means of communication with the Board, the independent auditors, the senior internal accounting personnel and management of the Company. The Committee shall be directly responsible for the appointment, compensation, and oversight of the work of any public accounting firm employed by the Company (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work, and each such public accounting firm shall report directly to the Committee.


A.      The Committee will consist of at least three members as designated by the Board of Directors to serve until their successors are duly designated. One of the members will be designated by the Board to serve as Committee Chairman.

B.       Qualifications:

o        Each member of the Committee shall be an “independent” director within the meaning of the American Stock Exchange (“Exchange”) rules and, as such, shall be free from any relationship that may interfere with the exercise of his or her independent judgment as a member of the Committee.

o        The members must not (i) accept any consulting, advisory, or other compensatory fee from the Company; or (ii) be an affiliated person of the Company or any subsidiary thereof.

o        Each Committee member shall be financially literate, as determined by the Board of Directors in its business judgment.

o        At least one member of the Committee must have accounting or financial management expertise, as determined by the Board of Directors in its business judgment. At a minimum, this person must have, through: (i) education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions; (ii) experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions, or experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluations of financial statements; or (iii) other relevant experience —

1.        an understanding of financial statements and generally accepted accounting principles;

2.        an ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;

3.        experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities;

4.        an understanding of internal controls and procedures for financial reporting; and

5.        an understanding of audit committee functions.

o        The independence requirements for the members shall be subject to any limitations or exceptions permitted from time to time by Federal law or the rules and regulations of the Exchange.

C.       The Committee shall meet with such frequency and at such intervals as it shall determine is necessary to carry out its duties and responsibilities. The Committee shall meet at least quarterly with management, the senior internal accounting staff and the Company’s independent auditors in separate executive sessions to discuss any matters that the Committee or each of these groups or persons believes should be discussed privately. The Committee may request any officer or employee of the Company or outside counsel or a representative of the independent auditors to meet with the Committee or any member thereof.

D.      The Committee shall ensure that the Company promptly provides the Exchange, in accordance with Exchange rules then in effect, upon any changes in the composition of the Committee and otherwise approximately once each year, with written confirmation regarding:

o        Any determination that the Board has made regarding the independence of the Committee members;

o        The financial literacy of the Committee members;

o        The determination that at least one member of the Committee has accounting or financial management expertise; and

o        The annual review and reassessment of the adequacy of the Committee’s charter.

E.       The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a Committee of the Board of Directors, for payment of compensation—

o        to the public accounting firm employed by the Company for the purpose of rendering or issuing an audit report; and

o        to any advisors employed by the Committee under Section III.

Roles and Responsibilities

In carrying out its duties and responsibilities, the Committee’s policies and procedures should remain flexible, so that it may be in a position to best react or respond to changing circumstances or conditions and to satisfy itself that the corporate accounting and financial reporting practices of the Company, as well as the auditing process, are in accordance with all applicable requirements. While there is no “blueprint” to be followed by the Committee in carrying out its duties and responsibilities, the following should be considered within the authority of the Committee:

1.        Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

2.        Select and retain the independent auditors, which auditors shall be instructed that they are ultimately accountable to the Audit Committee.

3.        Approve the fees to be paid to the independent auditors.

4.        Consider the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures through inquiry and discussions with the Company’s independent auditors and senior internal accounting staff and management of the Company.

5.        Ascertain the existence, if any, of reportable conditions and material weaknesses, as defined by the American Institute of Certified Public Accountants, affecting internal control through inquiry and discussions with the Company’s independent auditors, and consider the appropriateness of corrective action, if needed, being taken by management.

6.        Meet with the independent auditors prior to the annual audit to review their proposed audit scope and approach, including staffing of the audit and coordination of the audit work with the work of internal accounting personnel.

7.        Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit.

8.        Review the Company’s annual audited financial statements, including the Company’s disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with management and with the independent auditors, including major issues regarding accounting and auditing principles and practices, prior to the annual filings.

9.        Review an analysis prepared by management and the independent auditors of significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements.

10.     Review with management and the independent auditors the Company’s quarterly financial statements prior to the filing of its Form 10-Q. Confirm that the quarterly financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” have been reviewed by the Company’s independent auditors using professional standards and procedures for conducting such reviews, as established by U.S. generally accepted auditing standards.

11.     Review with management and the independent auditors all Company press releases summarizing earnings.

12.     Meet periodically with management to review the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.

13.     Review major changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditors or management.

14.     Take appropriate action to oversee the independence of the independent auditors and receive periodic reports from the independent auditors regarding the auditors’ independence consistent with Independence Standards Board Standard 1 and discuss such reports with the auditors.

15.     Evaluate the performance of the independent auditors and, if determined appropriate by the Audit Committee, replace the independent auditors.

16.     Review with the independent auditors any problems or difficulties the auditors may have encountered, any disagreements or issues between the independent auditors and management and how those disagreements or issues were resolved, and any management letter provided by the auditors and the Company’s response to the letter.

17.     Prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.

18.     If deemed appropriate, initiate special investigations into matters within the Committee’s scope of responsibilities or as delegated by the Board of Directors. and in connection therewith the Committee may retain independent counsel, accountants or others to assist it in the conduct of any investigation.

19.     The 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 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. This is the responsibility of management.