Audit Committee Charter
- Purpose and Authority
The primary function of the Audit Committee is to
assist the Board of Directors in fulfilling its financial and other oversight
responsibilities by serving as an independent and objective party to oversee,
monitor and appraise: (1) the integrity of the Company's financial statements
and other external financial information, financial reporting process and
internal controls; (2) the Company's auditing process, including all
engagements of the Company's independent accountants, the internal auditors and
the performance of financial management; and (3) the Company's ethical and
legal compliance. In furtherance of its purpose, the Committee shall strive to
provide an open avenue of communication among the Company's independent
accountants, internal auditors, management, and the Board.
In discharging its oversight role, the Committee is
empowered to investigate any matter brought to its attention with full access
to all books, records, facilities and personnel of the Company, and has the
authority to engage independent counsel and other advisers as it determines
necessary to carry out its duties. The Company shall provide funding, as
determined by the Committee, for payment of compensation to the independent
auditors and to any advisers the Committee retains.
- Membership Requirements
The Committee shall be comprised of three or more
directors as determined by the Board. All members of the Committee shall be
"independent" within the meaning of the listing standards of the Nasdaq Stock Market, including the independence standards
for Committee members prescribed by Rule 10A-3 under the Securities Exchange
Act. All members of the Committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement, and cash flow statement. At least one member shall be an 'audit
committee financial expert' within the meaning of the rules of the Securities
& Exchange Commission. Members of the Committee shall also meet such other
qualifications as may be imposed from time to time by the Board, by law or by
the listing requirements of the Nasdaq Stock Market.
Committee members should be able to devote sufficient time to carrying out the
responsibilities of a member of the Committee.
- Meetings and Governance
The Committee shall meet in connection with the
Company's annual audit and for other purposes as circumstances dictate. To
foster open communications, the Committee will meet in executive sessions with
the independent accountants, internal auditors and management as appropriate.
The Committee will report its activities and findings to the Board on a regular
The Board may appoint a Chair of the Committee. The
Chair will preside, when present, at all meetings of the Committee. One-third
of the members, but not less than two, will constitute a quorum. A majority of
the members present at any meeting at which a quorum is present may act on
behalf of the Committee. The Committee may meet by telephone or video
conference and may take action by written consent.
- Duties, Responsibilities and Activities
While the Committee has the duties and
responsibilities set forth in this Charter, management has primary
responsibility for the financial statements and the reporting process,
including the systems of internal controls and management's report thereon; and
the Company's independent accountants are responsible for performing an audit
of the Company's consolidated financial statements in accordance with auditing
standards generally accepted in the United States, for expressing an opinion as
to their conformity with generally accepted accounting principles, for
reviewing the Company's quarterly financial statements and for attesting to
management's report on the Company's internal control. The Committee's
responsibility is to monitor and oversee these processes.
- Review of Financial Statements, Reports and
The Committee shall review the Company's financial
statements, reports and other financial information, in conjunction with the
Company's internal financial management and independent accountants, as
appropriate. Such review shall generally include candid discussions of the
quality-not merely the acceptability-of the Company's accounting principles as
applied in its financial reporting. Reviews shall occur prior to dissemination
of the statement, report or other document to a third party or the public.
Without limitation, the Committee shall review, to the extent it deems
necessary or appropriate:
- The annual financial statements and other
material financial content of the Company's Annual Reports to
Shareholders and/or Annual Reports on Form 10-K.
- Any quarterly or other interim financial
statements and other material financial content of the Company's
Quarterly Reports on Form 10-Q.
- Any other material external financial
information, such as earnings releases.
- Any material internal reports prepared by the
independent accountants, internal auditors or management.
- The annual report of the Committee for
inclusion in the Company's annual proxy statement.
- This Charter on an annual basis, or more
frequently as circumstances dictate.
The Chair of the Committee may represent the
entire Committee for purposes of reviewing quarterly information, other
material external financial information such as earnings releases, or internal
reports to the extent permissible under the listing requirements of the Nasdaq Stock Market and generally accepted auditing
In addition to the reviews described above, the
Committee shall from time to time perform the following duties and
responsibilities and shall engage in the following activities to the extent
necessary or appropriate in the judgment of the Committee:
- Relationship with Independent Accountants and
Financial Reporting and Auditing Processes
- Appoint, compensate, retain and terminate the
independent accountants. The independent accountants shall report
directly to the Committee. The Committee shall have sole authority to
determine the compensation to be paid to the independent accountants for
any service. The Committee also shall be responsible for the oversight
and evaluation of the work of the independent accountants, including
resolution of disagreements between management and the independent accountants.
- Pre-approve all audit
and permitted non-audit services provided to the Company by the
independent accountants. The Committee may delegate pre-approval
authority to the Chair of the Committee or may adopt pre-approval
policies and procedures, to the extent permitted by applicable laws. Any
pre-approvals made pursuant to delegated authority or pre-approval
policies and procedures must be presented to the full Committee at its
next scheduled meeting.
- Receive a report or report update from the
independent accountants, within the time periods prescribed by the rules
of the SEC, on the following: (1) all critical accounting policies and
practices of the Company; (2) all material alternative treatments within
generally accepted accounting principles for policies and practices
related to material items that have been discussed with management,
including the ramifications of the use of such alternative disclosures
and treatments and the treatment preferred by the independent
accountants; and (3) other material written communications between the
independent accountants and management.
- Receive a formal written statement from the
independent accountants delineating all relationships between the
independent accountants and the Company. The Committee shall actively
engage the independent accountants in a dialogue with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the independent accountants and take appropriate action
to oversee the independence of the independent accountants.
- Oversee the objectives, activities and staffing
of the internal auditors.
Ethical and Legal Compliance
- Oversee the integrity of the Company's
financial reporting process, both internal and external.
- Discuss with the independent accountants,
internal auditors and management the overall scope and plans for their
- Review with the independent accountants, the
internal auditors and management the adequacy and effectiveness of the
Company's internal controls, including management's report on the
adequacy or effectiveness of internal controls and the fullness and
accuracy of the Company's financial statements. The Committee shall
consider the quality of presentation of, among other matters, critical
accounting policies, off-balance sheet transactions and financial
measures presented on a basis other than in accordance with generally
accepted accounting principles.
- Review the quality and appropriateness of the
Company's accounting principles and underlying estimates as applied in
its financial reporting, including the independent accountants'
judgments concerning the foregoing.
- In consultation with the independent
accountants, management and the internal auditors, review any major
changes or improvements to the Company's financial and accounting
principles and practices and internal controls.
- Discuss with management policies with respect
to risk assessment and risk management, including the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
- Establish and oversee 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.
- Review and approve all transactions to which
the Company is a party and in which any director or executive officer
has a direct or indirect material interest, apart from in their capacity
as director or executive officer.
- Oversee the development and administration of
an appropriate ethics and compliance program, including a code or codes
of ethics and business conduct. The Committee shall review requests for
and determine whether to grant or deny waivers of the Company's code of
ethics applicable to directors and executive officers.
In addition, the Committee may perform any other
activities in its discretion that are consistent with the Committee's purpose,
or as determined necessary or appropriate by the Board