Audit Committee Charter
(As adopted by the Board of Directors on
November 5, 2003)
The Board of Directors (the
“Board”) of Post Properties, Inc., a Georgia corporation (the “Corporation”),
has previously constituted and established an Audit Committee (the “Audit
Committee”) with the authority, responsibility and specific duties as described
herein. This Charter and the composition of the Audit Committee are intended to
comply with applicable law, including the federal securities laws and the rules
of The New York Stock Exchange (the “NYSE”). This document replaces and
supersedes in its entirety the previous Charter of the Audit Committee adopted
by the Board on May 17, 2000.
A. The primary function of
Audit Committee is to assist the Board of Directors of the Corporation (the
“Board”) in its oversight of:
- the integrity of the Corporation’s financial statements and
- the integrity and effectiveness of the Corporation’s disclosure and
- the Corporation’s compliance with legal and regulatory
- the independence, qualifications and performance of the
Corporation’s independent accountants; and
independence, qualifications and performance of the Corporation’s internal
audit function, as appropriate.
with this function, the Audit Committee shall encourage continuous improvement
of, and adherence to, the Corporation’s policies, procedures and practices at
Audit Committee shall primarily fulfill these responsibilities by carrying out
the activities enumerated in Section IV of this Charter.
A. The Audit Committee shall
be comprised of three (3) or more directors appointed by the Board, and the
Audit Committee’s composition will meet the requirements of the listing
standards of the NYSE (the “Listing Standards”), the Securities Exchange Act of
1934 (the “Exchange Act”) and the rules and regulations of the Securities and
Exchange Commission (the “Commission”). Accordingly, all members of the Audit
Committee will be “independent directors” within the meaning of the Listing
Standards, the Exchange Act and the rules and regulations of the Commission,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member of
the Audit Committee. The Board shall affirmatively conclude that the members of
the Audit Committee are independent, as required.
B. In addition, each member
of the Audit Committee will be financially literate and understand fundamental
financial statements, including the Corporation’s balance sheet, income
statement, and cash flow statement, at the time of appointment to the Audit
Committee. At least one member of the Audit Committee shall have accounting or
related financial management expertise, and by January 1, 2004, unless the
Board determines otherwise, at least one member must be an “audit committee
financial expert” as such term is defined by the rules and regulations of the
Commission. No member of the Audit Committee may simultaneously serve on more
than three (3) audit committees of public companies.
C. The members of the Audit
Committee shall be elected by the Board at the annual organizational meeting of
the Board and shall serve until their successors shall be duly elected and
qualified. Any vacancies on the Audit Committee occurring prior to the annual
organizational meeting shall be filled by the Board. Unless a Chairperson is
elected by the full Board, the members of the Audit Committee may designate a
Chairperson by majority vote of the full Audit Committee membership.
D. A majority of the Audit
Committee shall constitute a quorum to take any action by the Audit Committee.
A. The Audit Committee shall
meet at least four (4) times annually, and more frequently as circumstances may
dictate. The Audit Committee shall meet at least annually with management of
the Corporation (in particular the Corporation’s senior financial officers),
the Corporation’s internal auditors (or other personnel responsible for the
internal audit function) (as appropriate) and the Corporation’s independent
accountants in separate executive sessions to discuss any matters that the
Audit Committee or each of these groups believe should be discussed privately,
such as internal controls and the fullness and accuracy of the Corporation’s
financial statements. In addition, the Audit Committee should meet with the
independent accountants and management quarterly to review the Corporation’s
The Audit Committee is responsible for
oversight of the independent accountants, the Corporation’s internal accounting
controls and auditing functions, and the financial reporting process. The Audit
Committee recognizes that management is responsible for preparing the
Corporation’s financial statements and that the independent accountants are
responsible for auditing those financial statements. Additionally, the Audit
Committee recognizes that management, as well as the independent accountants,
have more time, knowledge and more detailed information on the Corporation than
do Audit Committee members. Consequently, in carrying out its oversight
responsibilities, the Audit Committee is not providing any expert or special
assurance as to the Corporation’s financial statements or any professional
certification as to the independent accountant’s work.
To fulfill its responsibilities and
duties, the following functions shall be the common recurring activities of the
Audit Committee in its oversight function. These functions are set forth as a
guide with the understanding that the Audit Committee may diverge from this
guide as appropriate given the circumstances and in compliance with the Listing
Standards, the Exchange Act and the rules and regulations of the Commission.
The Audit Committee shall:
- As part of an on-going self assessment process,
review and update this Charter periodically, and at least annually, or as
conditions may dictate.
- Request that the Corporation file this Charter
as an appendix to the Corporation’s proxy statement at least once every
three years and maintain a copy on the Corporation’s website.
- Review the Corporation’s annual financial statements
and any reports or other financial information submitted publicly,
including any certification, report, opinion or review rendered by the
independent accountants of the Corporation.
- Prepare the annual Audit Committee Report for
the Corporation’s proxy statement in accordance with applicable Securities
and Exchange Commission regulations.
- Directly appoint, retain, compensate, evaluate
and terminate the Corporation’s independent accountants. In addition, the
Audit Committee shall have the sole authority to approve all audit
engagement fees and terms. The independent accountants shall report
directly to the Audit Committee. Further, the Audit Committee shall be
directly responsible for oversight of the independent accountants,
including resolution of disagreements between management and the
- Discuss with the independent accountants at
least annually the accountants’ internal quality-control procedures, any
material issues raised by the most recent peer review and any other
matters required to be addressed pursuant to the Listing Standards.
- Discuss with the independent accountants the
matters required to be discussed by Statement of Auditing Standards No. 61
(Codification of Statement on Auditing Standards, AU § 380) relating to
the conduct of the audit.
- Receive from the independent accountants, on a
periodic basis, a formal written statement delineating all relationships
between the independent accountants and the Corporation consistent with
Independence Standards Board Standard 1 (ISB No. 1).
- Obtain from the independent accountants
assurance that Section 10A(b) of the Exchange Act
(generally relating to the auditors’ identification of illegal acts and
related party transactions) has not been implicated.
- Evaluate the independent accountants, including
the independent accountants’ qualifications, performance and independence,
the competence, experience and qualifications of the lead partner and
senior members of the independent accountants’ team, and the quality
control procedures of the independent accountants. The Audit Committee
also shall ensure the rotation of the audit partners as required by law.
The Audit Committee will present its conclusions with respect to the
independent accountants to the Board.
- Discuss with the independent accountants the
overall scope and plans for their audits, including the adequacy of
- Pre-approve all audit services and all
permissible non-audit services to be performed for the Corporation by its
independent accountants, as contemplated by Section 10A(i)
of the Exchange Act. The Audit Committee may delegate to one or more of
its members the authority to pre-approve audit services and permissible
non-audit services; provided, however, that all pre-approved services must
be disclosed by such delegate to the full Audit Committee at its next
- Recommend, if so determined by the Audit
Committee, that the Board take certain actions to satisfy itself of the
independent accountants’ independence.
- Receive an annual report from the independent
accountants that describes (a) all critical accounting policies and
practices to be used by the Corporation, (b) all material alternative
treatments within GAAP suggested to management, and (c) any other written
communication with management.
- Review with the management and the independent
accountants the Corporation’s interim financial statements and disclosures
and the information set forth in management’s Discussion and Analysis in
the Corporation’s Quarterly Reports on Form 10-Q prior to its filing or
prior to the release of earnings, including a discussion with the
independent accountants of the matters to be discussed by Statement of
Auditing Standards No. 6100(“SAS No. 61”).
- Review with the management and the independent
accountants the Corporation’s annual audited financial statements and
disclosures and the information set forth in management’s Discussion and
Analysis to be included in the Corporation’s Annual Report on Form 10-K
(or the Annual Report to Shareholders if distributed prior to the filing
of the Form 10-K) including (a) their judgment about the quality of the
Corporation’s accounting principles as applied in its financial reporting,
(b) the reasonableness of significant judgments, and (c) the clarity of
the disclosures in the financial statements. Recommend, based on its
review and discussion, that the audited financial statements be included
in the Corporation’s Form 10-K for filing with the Commission.
- Obtain a report made to the Audit Committee by
the Chief Executive Officer and Chief Financial Officer of the Corporation
during their certification processes for the Form 10-K and each Form 10-Q
which describes, if any, (a) all significant deficiencies in the design or
operation of the Corporation’s internal controls which could adversely
affect the Corporation’s ability to record, process and report financial
data, and (b) any fraud (whether or not material) involving management or
other employees who have a significant role in the Corporation’s internal
- Discuss generally, in terms of types of
information to be disclosed and the type of presentation to be made, the
Corporation’s earnings press releases as well as financial information and
earnings guidance provided to analysts and rating agencies. The Chairman
of the Audit Committee should review each earnings press release prior to
- In consultation with the independent
accountants, review the integrity of the Corporation’s financial reporting
processes, both internal and external. In support of this review,
periodically discuss with management the financial reporting controls over
key business processes of the Corporation and any special audit steps
adopted in light of material control deficiencies.
- Discuss with the independent accountants any
significant matters regarding internal controls over financial reporting
that have come to their attention during the conduct of the audit.
- Review analyses prepared by management and/or
the independent accountants setting forth significant financial reporting
issues and judgments made in connection with the preparation of financial
statements, including analyses of the effects of alternative GAAP methods
on the financial statements.
- Review the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the financial
statements of the Corporation.
- Consider management and the independent
accountants’ judgment about the quality and appropriateness of the Corporation’s
accounting principles and policies and changes to such principles and
policies as applied in its financial reporting.
- Assess the process for establishing key
estimates and reserves within the financial statements and consider the
independent accountants’ judgments about the appropriateness of such
- Consider the independent accountants’ judgment
about the appropriateness of the accounting principles and disclosure
practices adopted by management in connection with new transactions or
- Establish regular reporting to the Audit
Committee of significant judgments made in management’s preparation of the
Corporation’s financial statements.
- Following completion of the annual audit, review
separately with each of management and the independent accountants any
problems, difficulties or disagreements encountered during the course of
the audit, including any restrictions on the scope of work or access to
required information. As part of this review the Audit Committee should,
among other items, review: (a) any accounting adjustments that were noted
by the independent accountants but were “passed,” (b) any communications
between the audit team and the independent accountants’ national office
respecting auditing or accounting issues raised by the engagement and (c)
any management letter issued by the independent accountants to the
- Review any significant disagreement among
management and the independent accountants in connection with preparation of
the Corporation’s financial statements.
E. Ethical and
Legal Compliance and Risk Management
- Review the status of tax returns and any real estate investment
trust compliance issues.
- Review policies with respect to risk assessment and risk management.
Meet periodically with the management to review the Corporation’s major
financial risk exposures and the steps the management has taken to monitor
and control such exposures.
- Review the terms, conditions and arrangements involving any related
party or potential conflict of interest transactions.
- Approve the Corporation’s hiring of employees or former employees
of the independent accountants.
- Review, with the Corporation’s secretary, any legal matters that
could have a significant impact on the Corporation’s financial statements.
- Establish procedures for the receipt, retention and treatment of
complaints regarding the Corporation’s accounting, internal accounting
controls or auditing matters and confidential, anonymous submission by
employees of concerns regarding accounting questions or auditing matters.
- Develop or recommend to the Board for its approval those provisions
of a Code of Conduct as may be required by the Listing Standards and those
provisions of a Code of Ethics for Senior Executive Officers and Financial
Officers as may be required by the Exchange Act and rules and regulations
of the Commission that relate to areas that the Committee is responsible
for overseeing. Review the Corporation’s Code of Conduct and Code of
Ethics from time-to-time, as appropriate, and annually receive an
acknowledgment of compliance with the Code of Ethics by the Senior
Executive and Financial Officers.
- Review, with the Corporation’s secretary, legal compliance matters,
including corporate securities trading practices.
- Perform any other activities consistent with the Charter, the
Corporation’s Bylaws and governing law, as the Audit Committee or the
Board deems necessary or appropriate.
- Serve as the Qualified Legal Compliance Committee (the “QLCC”) with
the authority and responsibility as determined from time to time by the
Board of Directors. The Audit Committee, as the QLCC, shall establish
written procedures by which it will handle reports of material violations.
A. The Audit Committee shall
have prompt and unrestricted access to all financial and operating information
relevant to the Corporation’s business. The Audit Committee shall have ready
access to the Corporation’s legal counsel and to the independent accountants,
and shall be provided from time to time with staff assistance from within the
Corporation as requested.
Audit Committee is empowered to employ its own legal counsel, accountants or
other advisors, at the Corporation’s expense, to deal with specific problems or
issues that arise in the course of carrying out its duties and
C. Report periodically to
the Board, which report may include issues that arise with respect to (a) the
quality and integrity of the Corporation’s financial statements, (b) the
Corporation’s compliance with legal or regulatory requirements, (c) the
performance and independence of the Corporation’s independent auditors or (d)
the performance of the internal audit function.
D. Maintain minutes or other
records of meetings and activities of the Committee.
E. Annually evaluate the
performance of the Committee.
This Charter of the Audit Committee was
duly approved and adopted by the Board of the Corporation on the 5th day of
Name: Sherry W. Cohen
Title: Executive Vice