Audit Committee Charter
Adopted by the Board of Directors of Maxygen, Inc. on April 26, 2000
Amended by the Board of Directors of Maxygen, Inc. on December 16, 2002
Amended by the Board of Directors of Maxygen, Inc. on December 14, 2004
The purpose of the audit committee is to oversee Maxygen's accounting and financial reporting processes and the audits of its financial statements.
The audit committee shall be composed of three or more directors who shall meet the independence, financial literacy and experience requirements of Nasdaq, Section 10A(m)(3) of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission.
At least one member of the audit committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. At least one member of the audit committee shall be an “audit committee financial expert” as defined by the Securities and Exchange Commission.
No member of the audit committee shall, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee:
• accept any consulting, advisory, or other compensatory fee from Maxygen.
The members of the audit committee shall be appointed by the board of directors on the recommendation of the corporate governance and nomination committee. Unless a chairman is designated by the board of directors, the committee members may appoint their own chairman by majority vote.
The audit committee has the authority to hire independent counsel and other advisors to carry out its duties.
1. The audit committee is directly responsible for the appointment, compensation, and oversight of the Company’s independent auditors for the purpose of preparing or issuing an audit report or related work.
2. The audit committee is directly responsible for the resolution of disagreements between management and the auditor regarding financial reporting.
3. The independent auditors shall report directly to the audit committee.
4. The audit committee is responsible for establishing 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 submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
5. The audit committee shall determine an appropriate funding mechanism through which the Company shall provide for the payment of compensation to its independent and any advisors employed by the audit committee.
6. The audit committee must approve, in advance, the provision of all audit services and any permissible non-audit related services by the Company’s independent auditors; provided, however, that this responsibility may be delegated to the chairman of the audit committee. If the chairman duly approves any such services, the approval shall be presented to the audit committee for review at its next regular meeting.
7. The audit committee shall ensure the receipt of, and evaluate, the written disclosures and the letter that the independent auditor submits to the audit committee regarding the auditor’s independence in accordance with Independence Standards Board Standard No. 1, discuss such reports with the auditor and, if so determined by the audit committee in response to such reports take appropriate action to address issues raised by such evaluation.
8. The audit committee shall discuss with the independent auditor the matters required to be discussed by SAS 61, as it may be modified or supplemented.
9. The audit committee shall instruct the independent auditor and any internal auditor that the committee expects to be advised if there are any subjects that require special attention.
10. The audit committee shall meet with management and the independent auditor to discuss the annual financial statements and the report of the independent auditor thereon, and to discuss significant issues encountered in the course of the audit work, including restrictions on the scope of activities, access to required information and the adequacy of internal financial controls.
11. The audit committee shall review the management letter delivered by the independent auditor in connection with the audit and any auditor report from the independent auditors submitted to the audit committee.
12. Following such review and discussions, if so determined by the audit committee, the audit committee shall recommend to the board of directors that the annual financial statements be included in the Company’s annual report.
13. The audit committee shall review and discuss with management and the independent auditor the Company’s internal controls report and the independent auditor’s attestation of that report prior to the filing of the Company’s annual report.
14. The audit committee shall meet quarterly with management and the independent auditor to discuss the quarterly financial statements prior to the filing of the Form 10-Q.
15. The audit committee shall meet at least once each year in separate executive sessions with management, the internal auditor, if any, and the independent auditor to discuss matters that any of them or the committee believes could significantly affect the financial statements and should be discussed privately.
16. The audit committee shall have such meetings with management, the independent auditor and the internal auditor, if any, as the audit committee deems appropriate to discuss the concept and design of the Company’s information and reporting systems and the steps management has taken to address significant issues concerning those matters, and to discuss significant financial risk exposures facing the Company and the steps management has taken to monitor and control such exposures.
17. The audit committee shall review significant changes to the Company’s accounting principles and practices proposed by the independent auditor, the internal auditor, if any, or management.
18 . The audit committee shall review the scope and results of internal audits, if any.
19. The audit committee shall evaluate the performance of the internal auditor, if any, and, if so determined by the audit committee, replace the internal auditor, if any.
20. The audit committee shall conduct or authorize such inquiries into matters within the committee’s scope of responsibility, as the committee deems appropriate. The committee shall be empowered to retain independent counsel and other professionals to assist in the conduct of any such inquiries.
21. The audit committee shall provide minutes of audit committee meetings to the board of directors, and report to the board of directors on any significant matters arising from the committee’s work.
22. The audit committee shall, at least annually, review and reassess this charter and, if appropriate, recommend proposed changes to the board of directors.
23. The audit committee shall prepare any report that may be required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.
24. In the performance of its responsibilities, the audit committee is the representative of the stockholders. However, it is not the responsibility of the audit committee to plan or conduct audits, or to determine whether the Company’s financial statements are complete and accurate or in accordance with generally accepted accounting principles.