ADC TELECOMMUNICATIONS, INC.
2003 Audit Charter: ADCT
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
A minimum of 3 members, each of whom shall be directors appointed by the full Board.
Chair appointed by full Board.
Members of the Audit Committee ("Committee") shall meet the independence and experience requirements of the Securities and Exchange Commission ("SEC") and The Nasdaq Stock Market, Inc. ("Nasdaq") (as such requirements may be modified or supplemented from time to time). All members of the Committee shall have an understanding of finance and accounting sufficient to be able to read and understand financial statements at the time of their appointment to the Committee. The Committee shall review the requirements regarding financial expertise under applicable rules of the SEC or Nasdaq (when such rules become effective) and make recommendations to the Board regarding such matters.
A member of management, normally the Company's Secretary, is appointed by the Committee to serve as non-voting Secretary to the Committee. The CFO's staff and other management employees are available to the Committee. The Internal Auditor reports directly to the Committee.
The Committee's primary duties and responsibilities shall be as follows:
Selects, evaluates and, when appropriate, replaces the independent auditors. The independent auditors are ultimately accountable to the Committee.
Pre-approve any services provided by the independent auditor. The Committee may designate a member of the Committee to represent the entire Committee for purposes of approval of non-audit series, subject to review by the full Committee at the next regularly scheduled meeting. The Company's independent auditors may not be engaged to perform any service prohibited by the Sarbanes-Oxley Act of 2002, the rules of the Public Company Accounting Oversight Board or the SEC.
Reviews audit plan of auditors and approves scope of services, fees and results of the auditor's annual audit.
Reviews the significant accounting and reporting principles and related policies and procedures.
Review internal controls.
Responsible for ensuring receipt from the independent auditors of a formal written statement delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard No. 1 (as may be modified or supplemented). Also responsible for engaging in an active dialog with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors and for taking any appropriate action to oversee the independence of the outside auditors.
Approves the appointment and termination or reassignment of the manager of internal audit.
Approves annual internal audit plans and reviews audit results. Reviews internal controls and recommends changes in other internal systems for efficiency or as otherwise indicated.
Annually prepares a report to shareholders as required by the SEC to be included in the Company's annual proxy statement.
Prior to the Company's releasing the year-end earnings, reviews and discusses the financial statements with management and discusses the results of the audit with the independent auditors. Discusses with the independent auditors the matters required to be communicated to audit committees in accordance with AICPA SAS 61, as amended by SAS 90, relating to the conduct of the audit.
Recommends to the Board that the audited financial statements be included in the annual report on Form 10-K to be filed with the SEC.
Communicates with the Company's management and the independent auditors each quarter to review the Company's quarterly financial statements and any significant issues relating thereto based upon the auditors' limited review procedures per AICPA SAS 71. Should the Committee as a group be unable to make such communications because of the lack of a quorum for a meeting or otherwise, then this task should be carried out by the Chair of the Committee.
Consider the independent auditors' judgment about the quality and appropriateness of the Company's accounting principles and critical accounting estimates as applied in its financial reporting.
Reviews the Company's Code of Business Conduct (the "Code of Conduct"). Reviews management's processes for ensuring compliance with the Code of Conduct and related policies as well as applicable laws. Reviews any significant issues related to compliance with the Code of Conduct or applicable laws.
The Committee and the full Board (acting only through its independent directors) shall each have the authority to grant waivers of the Code of Conduct with respect to officers of the Company after due consideration of all factors.
Establish and periodically review a Code of Ethics regarding financial and accounting matters for the Company's senior management, which may or may not be made a part of the Code of Conduct, as determined by the Committee.
Establish procedures for the receipt, retention, response to and treatment of any complaints received by the Company regarding accounting, internal controls or auditing matters, including confidential anonymous submissions by the Company's employees, regarding accounting, internal controls or auditing matters.
Periodically reviews the Company's insurance coverage and risk management plan including the information system back-up (disaster) plan.
Review process established by management to assess and manage risks.
Unless otherwise assigned to a Board Finance Committee, bi-annually reviews the Company's lines of credit and the debt authorization. Approves the check authorization signature list and other signature policies as required.
3. Relationship to Board/CEO/CFO/Management
The Committee is authorized to retain independent attorneys, consultants or other independent persons to advise and assist the Committee, as it deems appropriate. Management of the Company will also assist the Committee with its functions by providing information, recommendations or other support as needed or requested.