AUDIT COMMITTEE CHARTER
Adopted April 21, 2000
Amended October 21, 2002
Amended March 15, 2004
There shall be a committee of
the board of directors to be known as the audit committee. The membership of the committee shall consist
of at least three independent directors who are generally knowledgeable in
financial and auditing matters and are able to read and understand fundamental
financial statements, in accordance with the NASDAQ National Market Audit
The audit committee shall be
comprised solely of independent directors, as defined in (i) NASDAQ Rule 4200
and (ii) the rules of the SEC, who are free of any relationships that, in the
opinion of the board of directors, would interfere with their exercise of
independent judgment as a committee member.
The audit committee shall
have at least one member who is, in the judgment of the board of directors, “an
audit committee financial expert” pursuant to the rules and regulations of the
SEC. To be an audit committee financial
expert, the committee member must meet the requirements set forth on Exhibit
The board of directors shall
appoint one member of the audit committee as chairperson. The chairperson shall be responsible for
leadership of the committee, presiding over the committee meetings, and
reporting to the full board of directors.
The audit committee will meet
at least four (4) times each calendar year, prior to the quarterly earnings
release. Meeting minutes will be
maintained for these meetings.
The audit committee may form
and delegate authority to subcommittees consisting of one or more members when
appropriate, provided that decisions of such subcommittee shall be presented to
the full audit committee at its next scheduled meeting.
Statement of Policy
The audit committee of the
board of directors assists the full board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and
reporting practices of the corporation and other such duties as directed by the
board. The independent auditors are ultimately accountable to the board of
directors and the audit committee, as representatives of shareholders, and the
audit committee has ultimate authority and responsibility to select, evaluate,
and, where appropriate, replace the independent auditors. It is the
responsibility of the audit committee to maintain free and open means of
communication between the directors, the independent auditors, and the
financial management of the corporation.
In discharging this oversight role, the committee is empowered to
investigate any matter brought to its attention within the scope of its duties,
with full power to retain outside counsel or other experts (at the expense of
the company) for this purpose if, in its judgment, that is appropriate.
The audit committee’s primary
- Appointment, compensation, oversight and
retention of the company’s independent auditors for the purpose of
preparing and issuing an audit report or related work.
- The audit committee will review and sign the
engagement letter with the independent auditors. In so doing, the
committee will request from the auditors a written affirmation that the
auditing firm is in fact independent and discuss with the auditors any
relationship that may impact the auditor’s independence.
- Meet with the independent auditors and the
financial management of the company to review and pre-approve the scope of
the proposed audit for the current year, and the audit services to be
rendered, and at the conclusion thereof receiving and reviewing the audit
reports, including any comments or recommendations of the independent
- Pre-approve all non-audit services to be
performed by the independent auditors. Review at each regularly scheduled audit
committee meeting a report summarizing the services, including fees,
provided by the independent auditors.
- Meet with the independent auditors without
members of management present.
Among the items to be discussed in these meetings are the
independent auditors’ evaluation of the company’s financial and accounting
personnel, and the cooperation the independent auditors received during
the course of the audit.
- Review, on a continuing basis, with the
independent auditors and the financial and accounting personnel the
adequacy and effectiveness of the accounting and financial controls of the
company, and elicit any recommendations for the improvement of such
internal control procedures or particular areas where new or more detailed
controls or procedures are desirable.
Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
- Discuss with management and the independent
auditors the effect of regulatory and accounting initiatives on the
company’s financial statements.
- Review before filing the disclosure regarding the
company’s system of internal control over financial reporting required by
the SEC to be contained in periodic filings and the attestations or
reports by the auditors relating to such disclosure.
- Review the audited financial statements and
discuss them with management and the independent auditors. These discussions shall include consideration
of the quality of the company’s accounting principles as applied in its
financial reporting, including review of estimates, reserves and accruals,
review of judgmental areas, review of audit adjustments whether or not
recorded and such other inquiries as may be appropriate.
- Review the financial statements contained in the
annual report to shareholders and in the Form 10-K with management and the
independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial statements to
be presented to the shareholders and Form 10-K to be filed with the
- Provide a report in the company’s proxy statement
in accordance with the rules and regulations of the SEC.
- Review with management and the independent
auditors the quarterly financial information and press release prior to
the company’s filing of Form 10-Q and quarterly earnings
- Direct the independent auditors to review such
interim financial statements using professional standards and procedures
for conducting such reviews.
- Discuss with management and external counsel the
status of pending litigation, taxation matters and other areas of
oversight to the legal and compliance areas as may be appropriate.
- Discuss with management the company’s major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
- Meet separately with the company’s CEO and
separately with the CFO as appropriate.
- Review the required reports from the independent
auditors to the audit committee describing the following:
- Critical accounting policies and practices used
by the company;
- All alternative treatments of financial
information within GAAP that have been discussed with management and the
ramifications of these alternative treatments, as well as the treatment
preferred by the auditors, and;
- Material written communications between the
auditor and management and between external counsel and management.
- Oversee compliance with the requirements of the
SEC for disclosure of auditor’s services and audit committee members,
member qualifications and activities.
- Review proposed
related party transactions for potential conflicts of interest and approve
all such transactions in advance.
- Establish procedures for receiving and reviewing
accounting-related complaints and concerns by whistle blowers.
- Review, approve and monitor the company’s code of
ethics for senior financial personnel.
- Review the audit committee’s own structure,
processes and membership requirements and overseeing compliance with the
requirements of the SEC for disclosure of audit committee members, member
qualifications and activities.
In addition to the
responsibilities outlined in this charter, the audit committee shall perform
such other specific functions as the company’s board of directors may from time
to time direct.
While the audit
committee has the responsibilities and powers set forth in this charter, the
company’s financial statements are the responsibility of management and the
independent auditors are responsible for planning and conducting audits to
determine whether the company’s consolidated financial statements present
fairly in all material respects the financial position of the company.
Audit Committee Financial Expert
Pursuant to Item 401(h) of SEC Regulation S-K
audit committee financial expert means a person who has the following
(i) An understanding of generally accepted accounting principles
and financial statements;
(ii) The ability to assess the general application of such
principles in connection with the accounting for estimates, accruals and
(iii) 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 registrant's
financial statements, or experience actively supervising one or more persons
engaged in such activities;
(iv) An understanding of internal controls and procedures for
financial reporting; and
(v) An understanding of audit committee functions.
person shall have acquired such attributes 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
(ii) Experience actively supervising a principal financial
officer, principal accounting officer, controller, public accountant, auditor
or person performing similar functions;
(iii) Experience overseeing or assessing the performance of
companies or public accountants with respect to the preparation, auditing or
evaluation of financial statements; or
(iv) Other relevant experience.