Audit Committee Charter

 

Purpose of Audit Committee

While the Committee has the functions, duties and authorities set forth in this Charter, its role is one of oversight. It is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate or are in accordance with generally accepted accounting principles. This is the responsibility of management. The independent auditors are responsible for planning and carrying out a proper audit and review, including reviews of the Company’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q. In fulfilling their responsibilities, it is recognized that members of the Committee are not employees of the Company and are not, and do not represent themselves to be, serving as accountants or auditors. As such, it is not the responsibility of the Committee or its members to conduct ”field work” or other types of auditing or accounting procedures and each member of the Committee shall be entitled to rely, in good faith, on the integrity of those persons or organizations within and outside of the Company that it receives information, opinions, reports, or statements from and the accuracy of the financial and other information, opinions, reports, or statements provided to the Committee by such persons or organizations.

Composition and Term of Office:

  • The Audit Committee shall be comprised of not less than three members of the Corporate Board as may be appointed to the Committee from time to time by a majority of the Board all of whom shall be independent of management of the Company and shall satisfy the independence requirements of the Nasdaq Stock Market, Inc. (“Nasdaq”) for listed companies, as interpreted by the Board in its business judgment.
  • The members of the Committee shall serve one-year terms and shall be appointed annually by the Board.
  • The Chairman of the Audit Committee shall be designated by the Board out of those members appointed to the Committee, and this member’s vote shall be recorded.
  • The Chairman shall preside at meetings of the Audit Committee and he may request other Officers of the Company to serve as ex officio members of the Audit Committee. The Audit Committee members shall determine whether to exclude ex officio members from any portion of the meetings of the Audit Committee.
  • In accordance with regulations, all members of the Audit Committee shall be “financially literate” and at least one member shall have accounting or related financial management expertise and be designated as a “financial expert”.

Committee Meetings – Operating Principles - Role and Scope of Authority:

The role of the Audit Committee is to ensure to the Board and the Company’s shareholders, potential shareholders and investment community that the corporate accounting and financial reporting practices of the Company are in accordance with all applicable requirements. The Audit Committee shall assist the Board, through review and recommendation, in its oversight responsibility related to the quality and integrity of the Company’s consolidated financial information and reporting, the adequacy and effectiveness of the Company’s system of internal accounting and financial controls, and the independent audit process. The duties of the Audit Committee shall include the following:

  • Meet at least four times each year and at such other times as it deems necessary to fulfill its responsibilities;
  • Have sole authority to select, retain, evaluate, and replace the independent auditors;
  • Review with the independent auditors, the Company’s internal auditor (if appointed), and 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;
  • Pre-approve all non-audit services, including tax work, or other allowable services to be performed by external accountants or auditors; provided, however, that such pre-approval is not required where the services are not specifically forbidden and the total amount of fees for such non-audit services do not exceed $25,000 per year with no specific service exceeding $10,000.
  • Periodically review the Company's policy statements to determine adherence to the Corporate Code of Ethical Conduct;
  • Review the appointment and replacement of the Internal Audit Director who shall have a direct reporting relationship to the Audit Committee but shall report administratively to the Company’s CEO;
  • Review the internal audit function of the Company including the independence and authority of its reporting obligations; the proposed audit plans for the coming year, and the coordination of such plans with the independent auditors; Review the external audit function of the Company to ensure the independence of the independent auditors and discuss the Committee's findings with the Company’s Board;
  • Receive prior to each meeting, a summary of findings from completed internal audits and a progress report on the proposed internal audit plan, with explanations for any deviations from the original plan;
  • Review the financial statements contained in the annual report to shareholders 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 review any changes in accounting principles. Additionally, the Audit Committee or its designee will discuss the results of the review of the quarterly financial statements on Form 10Q with the independent auditors;
  • Provide sufficient opportunity for the internal auditors, independent auditors and others to meet with the members of the Audit Committee without members of management present (Among the items to be discussed in these meetings are the independent auditors’ evaluation of the Company's financial, accounting and auditing personnel, and the cooperation that the independent auditors received during the course of the audit.);
  • Review accounting and financial human resources and succession planning within the Company;
  • Establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, and auditing matters and the confidential, anonymous submission by employees of the Company or any of its subsidiaries or affiliates of concerns regarding questionable accounting or auditing matters;
  • Conduct and review with the Board of Directors annually an evaluation of the Committee’s performance with respect to the requirements of this Charter;

In carrying out its duties and responsibilities, the Audit Committee shall have direct access to independent counsel when deemed necessary and shall maintain free and open means of communication between the directors, the independent auditors, the internal auditors, and the financial management of the Company.

Manner of Acting:

A majority of the members of the Committee present (in person or by telephone) at any meeting of the Committee shall constitute a quorum and approval by a majority of the quorum is necessary for Committee action. Minutes shall be recorded of each meeting held. When appropriate, action may be taken by written consent in lieu of a meeting of the Committee.

Reports:

The Chairman of the Audit Committee (or in his absence such other Committee member as the Committee may select) shall report on behalf of the Committee to the full Board at each regularly scheduled meeting with respect to any action taken by the Committee if any meetings of the Committee have been held (or action otherwise taken) since the date of the previous Board meeting. In lieu of any such report, the minutes of meetings held or other record of action taken may be submitted to the Board of Directors for review.

Other Responsibilities:

The Committee shall review this charter annually and shall recommend changes to the full Board as appropriate. The Committee shall take such further actions or provide such further advice as the full Board may from time to time delegate to the Committee.