Audit Committee
COMPOSITION AND MEETINGS
The Audit Committee assists the Board in fulfilling its oversight
responsibilities. The Audit Committee
shall consist of no less than three members of the Board of Directors, all of
whom shall in the judgment of the Board of Directors be independent in
accordance with applicable Securities and Exchange Commission (“SEC”) rules,
New York Stock Exchange (NYSE) listing standards and the Company’s Corporate
Governance Guidelines. Each member of
the Audit Committee shall in the judgment of the Board of Directors be
financially literate, as such qualification is interpreted by the Company’s
Board in its business judgment, have a basic understanding of finance and
accounting and be able to read and understand the Company’s fundamental financial
statements. At least one member of the
Committee shall in the judgment of the Board of Directors be an audit committee
financial expert in accordance with the rules and regulations of the SEC, and
at least one member (who may also serve as the Audit Committee financial
expert) shall in the judgment of the Board of Directors have accounting or
related financial management expertise in accordance with the NYSE listing
standards. Any director who satisfies
the SEC’s “audit committee financial expert” definition will be deemed to
satisfy the NYSE’s “accounting or related financial management expertise”
requirement, although the opposite may not be true.
The members of the Audit Committee and the Chairman of the
Committee shall be appointed by the Board on the recommendation of the
Nominating and Governance Committee. The
Board may, upon recommendation by the Nominating and Governance Committee,
remove any Audit Committee member at any time, with or without cause.
The Audit Committee shall meet at least five times annually,
or more frequently as circumstances dictate.
Meetings may be called by the Chairman of the Committee, the Chairman of
the Board or Chief Executive Officer, or a majority of the Committee. The Committee shall operate pursuant to the
Bylaws of the Company, including Bylaw provisions governing notice of meetings
and waivers of notice, the number of Committee members required to take actions
at meetings and by written consent, and other related matters. The Committee shall meet privately in
executive session at least annually with the General Counsel, the Chief
Operating Officer, the Chief Financial Officer or Corporate Controller, the
Chief Compliance and Ethics Officer, and periodically with any other member of
management the Committee believes necessary, and at least quarterly meets
privately with the Senior Vice President of the Company’s internal auditing
function and also privately with the Company’s independent auditor. The Committee shall maintain minutes of its
meetings and report its findings to the Board after each Committee meeting but
not later than the next quarterly Board meeting. PURPOSE
The Audit Committee’s primary purpose is to:
A. Assist the Board in its oversight responsibilities to
shareholders, specifically with respect to:
1. the integrity of the Company’s financial statements,
2. the Company’s compliance with legal and regulatory
requirements
3. the qualifications
and independence of the independent auditor and internal auditing function,
4. the performance of
the Company’s internal audit function and independent auditor, and
5. the risks associated with the foregoing; and
B. Prepare the audit committee report required by the SEC’s
proxy rules to be included in the Company’s annual proxy statement. PRIMARY DUTIES AND RESPONSIBILITIES The Audit Committee’s primary duties and
responsibilities are to:
A. Monitor the integrity of the Company’s internal controls
over financial reporting.
B. Monitor the qualifications, independence and performance
of the Company’s independent auditor and internal auditing function.
C. Provide a channel of communication among the Board, the
independent auditor, internal auditing function, management and other concerned
individuals.
D. As a committee of the Board of Directors, assist the
Board in meeting its fiduciary duties to shareholders and the Company.
The Audit Committee may conduct or authorize investigations
into any matters within the Committee’s scope of responsibilities, as defined
by this Charter, and shall have direct access to the independent auditor as
well as anyone in the Company. SPECIFIC
RESPONSIBILITIES AND DUTIES The specific
responsibilities and duties of the Audit Committee are as follows:
A. Oversight of Financial Reporting Process
1. In consultation with management, the independent auditor
and the internal auditing function, review the integrity of the Company’s
internal controls over financial reporting, including the process for assessing
risk of fraudulent financial reporting and detection of material control
weaknesses. Review significant financial
risk exposures, including off- balance sheet financing, if any, and the steps
management has taken to monitor and report such exposures. Review with the independent auditor any audit
problems or difficulties, or significant findings prepared by the independent
auditor, together with management’s responses.
2. Meet to review and discuss the Company’s annual audited
financial statements, including reviewing the Company’s specific disclosures
under “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” prior to filing or distribution, and discuss the same with
management and the independent auditor.
Recommend to the Board whether the audited financial statements should
be included in the Annual Report on Form 10-K.
Review should include discussion with management and independent
auditors of significant issues regarding accounting principles, practices and
judgments. The Audit Committee should consider the independent auditor’s
judgments about the quality and appropriateness of the Company’s accounting
principles as applied in its financial reporting.
3. Review with financial management and the independent
auditor the Company’s quarterly and year-end financial results prior to the
public release of earnings. The Audit
Committee will discuss earnings press releases, as well as financial
information and earnings guidance
provided to analysts and rating agencies. The discussion may be done generally by
discussion of the types of information to be disclosed.
4. Meet to review and discuss the quarterly financial
statements with management and the independent auditor, including reviewing the
Company’s specific disclosures under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” prior to filing or
distribution.
5. Review major issues regarding accounting principles and
financial statement presentations, including any significant changes in the
Company’s selection or application of accounting principles, and major issues
as to the adequacy of the Company’s internal controls over financial reporting
and any special audit steps adopted in light of material control
deficiencies.
6. Review analyses prepared by management or the independent
auditor identifying significant financial reporting issues and judgments made
in connection with the preparation of the financial statements, including
analyses of the effects of alternative GAAP methods on the financial statements.
7. Review the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the Company’s
financial statements.
8. Review and ratify the charter of the Company’s Disclosure
Committee, and review the adequacy of the Company’s Disclosure Controls and
Procedures.
9. Review and discuss with management SEC comment letters or
other communications regarding the Company’s public filings and the Company’s
responses thereto.
B. Appointment and Oversight of Independent Auditor
1. Directly appoint, retain, compensate, oversee, evaluate
and terminate the Company’s independent auditor. The Audit Committee shall confirm with the
independent auditor that it must report directly to the Audit Committee. The Audit Committee may obtain input from
management, but is directly responsible for oversight of the independent
auditor, including resolution of disagreements between management and the
independent auditor. Although not
required, the Audit Committee may, at its option, recommend that the Board
submit the appointment of the independent auditor to the shareholders of the
Company for ratification at the annual meeting in order to obtain the views of
the shareholders. If the appointment is
not ratified by the shareholders, the Audit Committee will reconsider its
selection.
2. Pre-approve all non-audit services to be performed by the
independent auditor in accordance with the Company’s CM-9 policy.
3. At least annually, consider the independence of the
independent auditor, including a review of any significant engagements of the
independent auditor and all other significant relationships with the auditor
that could impair its independence.
4. Set clear hiring policies for employees or former
employees of the independent auditor.
5. Approve all audit engagement fees and terms, as well as
all significant non-audit engagements with the independent auditor. Review the amounts of fees paid to the
independent auditor for audit and non-audit services.
6. Review with the independent auditor its audit plan,
including the scope of its audit and general audit approach. The Committee may request or recommend
supplemental review or other audit procedures as the Committee deems
necessary.
7. Meet periodically, at least quarterly, without management
present, with the Company’s independent auditor to discuss the Company’s
cooperation with the independent auditor and other matters as deemed
appropriate.
8. Prior to releasing year-end earnings, discuss with the
independent auditor the results of the audit and certain other matters required
to be communicated to audit committees in accordance with AICPA SAS 114.
9. 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.
10. After reviewing the foregoing report and the independent
auditor’s work throughout the year, evaluate the independent auditor’s
qualifications, performance and independence, including the performance of the
lead partner of the independent auditor.
The Audit Committee shall assure regular rotation of the lead audit
partner as required by law, and further consider whether, in order to assure
continuing auditor independence, there should be regular rotation of the audit
firm itself. The Audit Committee shall
present its conclusions with respect to the independent auditor to the full
Board.
C. Oversight of Internal Audit Function
1. Make certain the Company maintains an internal audit
function that provides management and the Audit Committee with ongoing
assessments of the Company’s risk management process and system of internal
control. Review the budget, plan,
organizational structure, staffing and qualifications of the internal audit
function.
2. Review any significant reports prepared by the internal
audit function, including those involving the internal audit function’s
investigation of fraud, complaints or internal control matters, together with
management’s response and follow-up to these reports.
D. Other Audit Committee Responsibilities
1. Review the policies and practices developed and
implemented by management with respect to risk assessment and risk
management. The Committee shall not be
required to duplicate the review of risk management or risk assessment
processes that are performed by the full Board of Directors, other Committees
of the Board, and/or through mechanisms other than the Audit Committee, which
mechanisms are established by Company practice or policy. These processes, reviews and mechanisms,
however, should be reviewed by the Committee in a general manner.
2. Establish procedures for the receipt, retention and
treatment of complaints received by the Company on accounting, internal
controls over financial reporting or auditing matters, as well as for
confidential, anonymous submissions by Company employees of concerns regarding
questionable accounting or auditing matters.
3. Review the scope, coverage and results of employee
benefit plan or other audits with management.
4. Review the quality and depth of staffing in the Company’s
accounting, finance and information technology departments, as needed.
5. Review the expenses of Company directors and the
perquisites of executive officers.
6. Review any significant internal controls over financial
reporting improvements recommended by the independent auditor or internal audit
function.
7. Annually prepare a report to shareholders as required by
the SEC, covering the findings and recommendations of the Committee, and
include the report in the Company’s annual proxy statement.
8. Oversee the Company’s policies and procedures regarding
compliance with applicable laws and regulations and the Company’s Code of
Business Conduct and Ethics, and receive reports from the General Counsel and
Chief Compliance and Ethics Officer as needed, but not less than annually.
9. Carry out any other specific assignment or activity
consistent with this Charter, the Company’s By-laws and governing law as the
Board of Directors or the Committee deems necessary or appropriate.
10. Conduct an annual performance evaluation of the Audit
Committee.
11. Review and reassess the adequacy of this Charter at
least annually. Recommend any changes to
the Charter to the Board of Directors for approval and have the Charter
published in accordance with SEC regulations. FOR FURTHER ENQUIRY CALL JEROME 08076058841.
