ONE LIBERTY PROPERTIES, INC.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

CHARTER

I.         Purpose

The Audit Committee is a committee of the Board of Directors.  The primary function of the Audit Committee is to oversee the accounting, auditing and financial reporting policies and practices of One Liberty Properties, Inc. (the “Company”) by reviewing with management and external and internal auditors the financial information that will be provided to shareholders and others, the systems of internal controls that management has established, the qualifications, independence, compensation, performance and selection of independent auditors, the Company’s audit and financial reporting process, and the Company’s compliance with legal and regulatory requirements.  The Audit Committee will fulfill its responsibilities by carrying out its activities and duties consistent with this Charter.  The Audit Committee shall be given full and direct access to the Company’s management, the Company’s employees and independent auditors as necessary to carry out these responsibilities.

Committee members are encouraged to enhance their familiarity with finance and accounting by participating in educational programs, which will be paid for by the Company.

II.                   Composition

The Audit Committee shall be comprised of three or more directors.  The members of the Audit Committee shall be nominated by the Nominating and Corporate Governance Committee and elected by the Board at the annual organizational meeting to one-year terms or until their successors are elected and shall qualify.  Each member shall satisfy the independence, experience and financial literacy requirements of the New York Stock Exchange, the Sarbanes-Oxley Act of 2002 and applicable rules and regulations of the Securities and Exchange Commission.

At least one member of the Audit Committee shall be a “financial expert” as required by the Sarbanes-Oxley Act of 2002, the New York Stock Exchange listing standards and the rules and regulations of the Securities and Exchange Commission.  The designation of one or more members as a “financial expert” shall not impose any duties, obligations or liabilities on such member greater than the regular duties, obligations, and liabilities as a member of the Committee or the Board.

If any Committee member simultaneously serves on the audit committee of other public companies, the Board must determine that such simultaneous service or services will not impair the ability of such member to effectively serve on the Company’s Audit Committee.

Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Audit Committee membership.

No consulting, advisory or compensatory fees shall be paid by or for the Company to any member of the Committee or to any entity with which he or she is affiliated, other than director and committee fees payable by the Company in the regular course.  Board and committee fees may be payable in cash, shares, options and/or in kind.  Committee members may receive additional compensation from the Company for their service on the Committee and for being Chairperson of the Committee.

III.                  Meetings.

The Audit Committee shall meet at least quarterly, or more frequently as circumstances dictate.  The timing of the meetings shall be determined by the Audit Committee.  However, the Audit Committee will meet at any time that the independent auditors, personnel at the Company involved in internal auditing or management believe communication to the Audit Committee is required.  As part of its job to foster open communication, the Audit Committee shall meet periodically with management, the directors and the independent auditors in separate executive sessions to discuss any matter which the Committee or each of these groups believes should be discussed privately.  Minutes shall be kept of each meeting of the Audit Committee.

IV.                Responsibilities and Duties

The Committee shall have the following duties and responsibilities:

GENERAL RESPONSIBILIITES:

·         To report Committee actions to the full Board of Directors and make appropriate recommendations.

·         To inquire as to the independence of the independent auditors.  As part of this responsibility, the Committee will ensure that the independent auditors submit on a periodic basis to the Committee a formal written statement delineating all relationships between such auditors and the Company.  The Committee is responsible for actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and for recommending that the Board of Directors take appropriate action in response to the independent auditors’ report to satisfy itself of the independent auditors’ independence.

·         To conduct or authorize investigations into matters within the Committee’s scope of responsibility.  The Committee is authorized to the extent it deems necessary or appropriate, at the Company’s expense and without Board approval, to retain independent counsel, accountants or other advisors to assist the Committee in fulfilling its duties.  The Committee may request any officer, director or employee of the Company or the Company’s outside counsel or independent auditors to attend any meeting of the Committee or to meet with any members of or consultants to the Committee.

·         To review and approve, specifically and in advance, any permitted non-audit services proposed to be provided to the Company by its independent auditors, and ensure that such services do not interfere with the independence of such auditors, and do not give rise to an appearance of impropriety.  Pre-approval of permitted non-audit services may be delegated to the Chairman or another member of the Committee.

·         To establish 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 concerns regarding accounting, auditing or internal control issues.

·         To meet separately and periodically, with management and with independent auditors.

·         To review and establish hiring policies regulating the hiring by the Company of employees or former employees of the Company’s independent auditors.

·         To review and approve all related party transactions involving the Company and any affiliated Company, executive officer, director or employee or family member of any of the foregoing.

RESPONSIBILITIES FOR ENGAGING INDEPENDENT AUDITORS AND REVIEWING INTERNAL AUDIT FUNCTION:

·         To be directly and solely responsible for the appointment, retention and evaluation of the independent auditors and to be solely responsible for the approval of any replacement of the independent auditors if circumstances warrant such action.  The Audit Committee will review and approve fees paid to the independent auditors, including audit and non-audit fees, generally before such services are provided.

·         To consider policies and procedures by the audit firm for audit and review partner rotation as required by the rules and regulations of the Securities and Exchange Commission.

·         To obtain and review at least annually a report by the independent auditors describing the firm’s internal quality control procedures, any material issues raised by the most recent 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 on by the firm, and any steps taken to deal with any such issues;

·         To review and discuss with management and the independent auditors the quality and adequacy of the Company’s internal controls.

·         To review and discuss with management and the independent auditors the significant findings resulting from any examination of the Company’s internal controls.

RESPONSIBILITIES REGARDING THE ANNUAL AUDIT AND QUARTERLY AND ANNUAL FINANCIAL STATEMENTS:

·         The Audit Committee will discuss with the Independent Auditors:

·         The planned arrangements and scope of the annual audit prior to significantaudit services being performed and the Committee will approve the scope of the annual audit.

·         The adequacy of the Company’s internal controls, including computerized information systems controls and security and financial reporting controls.

·         The need for the independent auditors to assess their responsibility for detecting accounting and financial reporting errors, fraud and defalcations, illegal acts and non-compliance with the Company’s Code of Business Conduct and Ethics.

·         The need for changes or improvements in financial or accounting practices or controls.

·         The Audit Committee will strive to insure that the independent auditors provide the Committee with timely notification and analysis of significant financial reporting issues.

·         The Audit Committee will have discussions with management and the independent auditors regarding the annual report filed with the Securities and Exchange Commission (Form 10-K) and other published documents containing the Company’s financial statements including related notes and all of the Company’s disclosures under “Management Discussion and Analysis of Financial Condition and Results of Operations”.  Each Form 10-K must be approved by the Committee prior to filing, either at a meeting, or by a telephone conference call in which management and the independent auditors participate.

·         The Audit Committee will have discussions with management and the independent auditors regarding each quarterly report filed with the Securities and Exchange Commission (Form 10-Q) and all of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.  Each Form 10-Q must be approved by the Committee prior to filing, either at a meeting, or by a telephone conference call in which management and the independent auditors participate.

·         The Audit Committee Will Discuss With Management And The Independent Auditors:

·         The independent auditor’s audit of, and report on, the financial statements.

·         The independent auditor’s qualitative judgment about the quality, not just the acceptability, of the accounting principles and financial disclosures.

·         The matters required to be discussed by Statement on Auditing Standards No. 61, as it may be amended, including but not limited to:

-          Methods used to account for significant unusual transactions.

-          Effect of significant accounting policies in controversial or emerging areas.

-          Process and basis for sensitive accounting estimates.

-          Disagreements between independent auditors and management over accounting or disclosure matters.

·         Any serious difficulties or disputes with management encountered during the course of the audit.  The Audit Committee is directly responsible for the resolution of disagreements between management and the Company’s independent auditors regarding financial reporting.

·         The Company’s significant risks and exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies or guidelines, if any.

PERIODIC RESPONSIBILITIES:

·         Review annually the Committee’s charter for adequacy and recommend any changes to the Board.

·         Meet with the independent auditors and management in separate executive sessions to discuss matters that should be discussed privately with the Committee.

·         Review the Committee’s methodology and functions at least annually; evaluate its performance and institute appropriate changes to improve performance or reflect changes in the business environment.

·         Prepare an annual Committee report or other proxy statement disclosure about the Committee and its activities in accordance with rules and regulations of the Securities and Exchange Commission and other applicable law.

·         Include a copy of the Committee charter as an appendix to the proxy statement at least once every three years.

·         Review periodically the Company’s policies and procedures that pertain to the Company’s financial reporting process, system of internal controls, and compliance and ensure that management has established a system to enforce these policies.

·         Discuss with management the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies, if any.

·         Perform an annual self-evaluation of its performance and compliance with the Charter.

The Audit Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of the Company’s financial statements.  Members of the Committee rely without independent verification on the information provided to them and the representations made to them by management and the independent auditors, and look to management to provide full and timely disclosure of all material facts affecting the Company.  Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting policies, appropriate internal controls and procedures or appropriate disclosure controls and procedures, or that the Company’s reports and information provided under the Securities Exchange Act of 1934 (“Exchange Act”) are accurate and complete.  Furthermore, the Audit Committee’s consideration and discussions referred to in this Charter do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles, that the Company’s auditors are in fact “independent”, or that the matters required to be certified by the Company’s Chief Executive Officer, Chief Financial Officer or other officers of the Company under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the Securities and Exchange Commission have been properly and accurately certified.

(04/OLP/OLPACCHARTER04)