VALUEVISION MEDIA, INC.
Audit Committee Charter
There will be an Audit Committee (the “Committee”) of the
Board of Directors (the “Board”) of ValueVision Media, Inc., a
The Committee will have the responsibility and authority to oversee the Company’s management and independent auditors in regard to corporate accounting and financial reporting, to select, evaluate and, where appropriate, replace the independent auditors, and to nominate the independent auditors to be proposed for approval by the shareholders in any proxy statement. The Committee also has oversight of the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence and the performance of the Company’s internal audit function and independent auditor. The Committee has the authority to conduct any investigation it deems appropriate, with full access to all books and records, facilities, personnel and outside advisors of the Company. The Committee will prepare an audit committee report as required by the rules of the SEC to be included in the Company’s annual proxy statement.
The Committee is empowered to retain its own outside legal counsel, auditors or other experts in its discretion to advise the Committee and to compensate such parties with the Company’s funds. The Company will provide appropriate funding, as determined by the Committee, for payment of compensation to any such advisors employed by the Committee.
The Committee will meet as often as it determines, but not less frequently than quarterly. The Committee will meet periodically with management, the internal auditors and the independent auditor in separate executive sessions. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Committee will report regularly to the Board through presentations at Board meetings or by submission of the minutes of the Committee meetings to the Board. In addition to funding for the specific purposes described above, the Company will provide appropriate funding, as determined by the Committee, for ordinary administrative expenses that are necessary for the Committee to carry out its duties.
The Committee will consist of at least three directors. Each director appointed to the Committee will:
a) not be disqualified from being an “independent director” within the meaning of Rule 4200 of the NASD Manual, and will have no relationship with the Company which, in the opinion of the Board, would interfere with the exercise of independent judgment;
b) not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years;
c) be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement. If a director is not capable of understanding such fundamental financial statements, he or she must become able to do so within a reasonable period of time after appointment to the Committee; and
d) satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations of the Securities and Exchange Commission.
In particular, the Chairman of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results in the director’s financial sophistication.
The Committee recognizes that the preparation of the Company’s financial statements and other financial information is the responsibility of the Company’s management and that the auditing, or conducting limited reviews, of those financial statements and other financial information is the responsibility of the Company’s independent auditors. The Committee’s responsibility is to oversee the financial reporting process.
The Company’s management and its independent auditors, in the exercise of their responsibilities, acquire greater knowledge and more detailed information about the Company and its financial affairs than the members of the Committee. Consequently, the Committee is not responsible for providing any expert or other special assurance as to the Company’s financial statements and other financial information or any professional certification as to the independent auditors’ work, including without limitation their reports on, and limited reviews of, the Company’s financial statements and other financial information. In addition, the Committee is entitled to rely on information provided by the Company’s management and the independent auditors with respect to the nature of services provided by the independent auditors and the fees paid for such services. The independent auditors will report directly to the Committee. The independent auditors are ultimately accountable to the Board and the Committee, as representatives of the shareholders.
In carrying out its responsibilities, the Committee will:
a) have the sole authority to appoint or replace the Company’s independent auditors (subject, if applicable, to shareholder ratification);
b) be directly responsible for the compensation and oversight of the work of the independent auditors (including resolution of any disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
c) on an annual basis, review and reassess the adequacy of the Committee Charter annually and the Committee’s own performance;
d) require that the independent auditors provide the Committee with a formal written statement delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard No. 1, and discuss with the independent auditors their independence;
e) pre-approve all auditing services, internal control-related services and permitted non-audit services (including the terms thereof) to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion of the audit;
f) have the authority to retain independent counsel and other legal, accounting or other advisors as it determines necessary to carry out its duties;
g) recommend to the Board guidelines for the Company’s hiring of employees of the independent auditing firm engaged on the Company’s account;
h) obtain and review a report from the independent auditor at least annually regarding:
(a) the independent auditor’s internal quality-control procedures,
(b) 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,
(c) any steps taken to deal with any such issues, and
(d) all relationships between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1.
actively engage in a dialogue with the independent auditors regarding any disclosed relationships or services that may impact the objectivity and independence of the independent auditors. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence, taking into account the opinions of management and internal auditors. The Committee will present its conclusions with respect to the independent auditor to the Board;
i) obtain reports from Company management with responsibility for financial and auditing matters and from the independent auditors that the Company’s subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and the Company’s Business Ethics Policy, including disclosures of insider and affiliated party transactions;
j) evaluate, together with the Board, the performance of the independent auditors and whether it is appropriate to adopt a policy of rotating independent auditors on a regular basis and, if so determined by the Committee, recommend that the Board replace the independent auditors;
k) assure regular rotation of the lead audit partner and the reviewing audit partner of the Company’s independent auditors;
l) take, or recommend that the full Board take, appropriate action to oversee the independence of the independent auditors;
m) review with management and the independent auditors the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements;
n) review the experience and qualifications of the senior members of the independent auditors’ team and the quality control procedures of the independent auditor;
o) review and consider the matters identified in Statement on Auditing Standards No. 61 with the independent auditors and management, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management;
p) review an analysis prepared by management and the independent auditors of significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including an analysis of the effect of alternative GAAP methods on the Company’s financial statements and a description of any transactions as to which management obtained Statement on Auditing Standards No. 50 letters;
q) review with the independent auditors any problems or difficulties the independent auditors may have encountered and any management letter provided by the independent auditors and the Company’s response to that letter, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to required information and any disagreements with management;
r) meet on a regular basis with the Company’s chief financial officer and the independent auditors;
s) provide appropriate and adequate opportunities for the Company’s independent auditor to report to the Committee:
(i) all critical accounting policies and practices to be used;
(ii) all alternative treatments of financial information within GAAP that have been discussed with management officials of the Company, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the Company’s outside auditor; and
(iii) other material written communications between the Company’s outside auditor and the management of the Company, such as any management letter or schedule of unadjusted differences;
t) consider whether the provision of the services by the independent auditors (other than those services rendered in respect of the audit or review of the Company’s annual or quarterly financial statements) is compatible with maintaining the independent auditor’s independence;
u) review and discuss the Company’s audited financial statements that are to be included in the Company’s Form 10-K with the independent auditors and management and determine whether to recommend to the Board of Directors that the financial statements be included in the Company’s Form 10-K for filing with the Securities and Exchange Commission;
v) review with management and the independent auditors any correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies;
w) establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal control or auditing matters and the confidential, anonymous submission by employees of the Company regarding questionable accounting or auditing matters;
x) receive information from the Company’s management (including the Chief Executive Officer and the Chief Financial Officer) about any significant deficiencies and material weaknesses in the design or operation of internal controls that could adversely affect the Company’s ability to record, process, summarize and report financial data and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls;
y) review the terms of proposed engagements of the independent auditors relating to services to the Company in connection with any formal investigation of possible fraud, financial statement misstatements or material weaknesses in internal controls, prior to such engagements;
z) obtain from the independent auditors assurance that Section 10A(b) of the Exchange Act has not been implicated;
aa) review with management and the independent auditors any matters identified by the independent auditors pursuant to Statement on Auditing Standards No. 71 regarding the Company’s interim financial statements prior to the filing of such interim financial statements on the Company’s Form 10-Q, including the results of the independent auditors’ review of the interim financial statements;
bb) discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls and any special steps adopted in light of material control deficiencies;
cc) confirm that the none of the audit partners earn or receive compensation based on procuring engagements with the Company for providing products or services, other than audit review or attest services; and
dd) discuss with the national office of the independent auditor issues on which they were consulted by the Company’s audit team and matters of audit quality and consistency.