2003 Committee Charter : ADORGANIZATION
This charter governs the operations of the audit committee. The committee
shall be appointed by the board of directors, on the recommendation of the
compensation and nomination committee, and shall comprise at least three
directors, each of whom are independent of management and the Company. The board
of directors shall designate one member of the committee to serve as chair of
the committee. Committee members may be replaced by the board of directors on a
vote of a majority of the independent directors.
Members of the committee shall be considered independent if they meet the
independence criteria of the New York Stock Exchange, 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 (the "Commission"). All
committee members shall be financially literate, and at least one member shall
be an "audit committee financial expert" as defined by the Commission. Audit
committee members shall not simultaneously serve on the audit committees of more
than two other public companies unless the board of directors determines that
such simultaneous service would not impair the member's ability to serve on the
The committee shall meet as often as it determines, but not less frequently
than quarterly. The committee may form and delegate authority to a subcommittee
of one or more of its members when appropriate, provided that the decisions of
such subcommittee shall be reported to the full audit committee at its next
The committee shall make regular reports to the board of directors.
STATEMENT OF POLICY AND PURPOSE
The primary purpose of the audit committee shall be to provide assistance
to the board of directors in fulfilling its responsibility to oversee the
integrity of the Company's financial statements and financial reporting process,
the performance of the Company's systems of internal accounting and financial
controls, the Company's internal audit function, the independent auditors'
qualifications, independence, and performance, the annual independent audit of
the Company's financial statements, and the Company's compliance with legal and
regulatory requirements. A purpose of the audit committee shall also be to
prepare the Audit Committee Report to be included in the Company's proxy
statement for each annual meeting of stockholders and any other meeting of
stockholders at which members of the board of directors are to be elected.
It is the responsibility of the committee to maintain free and open
communication between the committee, the independent auditors, the internal
auditors, and management of the Company. 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. The
Committee shall have the power to retain (at the Company's expense) outside
counsel, auditors, or other advisors as it deems appropriate and to determine
the compensation and other terms of engagement of such outside counsel,
auditors, or other advisors.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of the committee's activities to the board. Management is responsible
for preparing the Company's financial statements, and the independent auditors
are responsible for auditing those financial statements.
The committee in carrying out its responsibilities believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and circumstances. The committee should take the appropriate actions
to set the overall corporate "tone" for quality financial reporting, sound
business risk practices, and ethical behavior.
The following shall be principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
- The committee shall have sole authority and direct responsibility over
the selection of the Company's independent auditors, subject to
shareholder ratification if the committee so elects. The committee shall
also have sole authority and direct responsibility over the evaluation
and replacement (as the committee may deem appropriate) of the
independent auditors, and the determination of the compensation and other
terms of engagement of such independent auditors. The committee shall
review the selection of the Company's independent auditors on an annual
- The committee shall pre-approve all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed
for the Company by its independent auditors, subject to de minimis
exceptions for non-audit services described in Section 10A(i)(1)(B) of
the Exchange Act that are approved by the committee prior to the
completion of the audit. The committee shall consider whether any
provision of permitted non-audit services by the Company's independent
auditors is compatible with their independence.
- The committee shall be responsible for resolving any disputes between
management and the independent auditors concerning financial reporting.
- The committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board.
- At least annually, the committee shall obtain and review a report by the
independent auditors describing: their internal quality-control
procedures; 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, any steps taken to deal with such issues; and (to assess
the auditors' independence), all relationships between the independent
auditors and the Company.
- The committee shall review and evaluate the lead audit partner and ensure
the rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for
reviewing the audit.
- The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits, including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the
committee shall meet separately with the internal auditors and the independent
auditors, with and without management present, to discuss the results of
- The committee shall review disclosures made to the committee by the
Company's Chief Executive Officer and Chief Financial Officer during
their certification process for the Form 10-K and the Form 10-Q about any
significant deficiencies in the design or operation of internal controls
or material weaknesses therein and any fraud involving management or
other employees who have a significant role in the Company's internal
- The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K), including disclosures made in management's
discussion and analysis, and recommend to the board of directors whether
the audited financial statements should be included in the Company's Form
10-K. Also, the committee shall discuss with the independent auditors the
results of the annual audit and any other matters required to be
communicated to the committee by the independent auditors under generally
accepted auditing standards.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
- The committee shall discuss with management and the independent auditors
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements, including
their judgment about the quality, not just acceptability, of accounting
principles, the reasonableness of significant judgments, and the clarity
of the disclosures in the financial statements. The committee shall
review major changes to the Company's accounting principles and practices
as suggested by the independent auditors, internal auditors, or
management, as well as the expected impact of new accounting initiatives.
- The committee shall obtain reports from the independent auditors on: all
critical accounting policies and practices to be used; all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management, the ramification of
such alternative disclosures and treatments, and the treatment preferred
by the independent auditors; and other material written communications
between the independent auditors and management, such as any management
letter or schedule of unadjusted differences.
- The committee shall discuss with management the Company's earnings press
releases, as well as any financial information and earnings guidance
provided by the Company to analysts and ratings agencies, and any use of
non-GAAP financial information. This discussion may be done generally
through a discussion of the types of information to be disclosed and the
types of presentations to be made.
- The committee shall also:
- Recommend to the board of directors policies for the hiring of employees
or former employees of the independent auditor.
- Have ultimate control of, and full oversight authority over, the
appointment of the outsourced internal audit firm.
- Have the authority to review and set the scope of reports to management
prepared by the internal auditing department, and management's
- Obtain from the independent auditor a representation that they noted no
matters required to be reported under Section 10A(b) of the Exchange
- Review and oversight over the Company's processes to assure that its
management, its internal auditors, and the independent auditor provide
representations that they did not note any violations of the Company of
applicable legal requirements.
- Provide oversight to the Company's legal counsel and others regarding
their monitoring compliance with the Company's Code of Conduct.
- Provide oversight and review of the Company's processes, and work with
the Company's legal counsel identifying and assessing any transactions
that may involve a conflict of interest on the part of a director or
- Review and provide ongoing oversight over the implementation of the
Company's 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 concerns regarding questionable
accounting or auditing matters.
- Review with the Company's legal counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies, and any material reports or inquiries received from regulators
or governmental agencies.
QUALIFIED LEGAL COMPLIANCE COMMITTEE
The committee shall also serve as the Company's Qualified Legal Compliance
Committee in accordance with the Qualified Legal Compliance Committee Charter.
EVALUATION OF THE CHARTER AND COMMITTEE PERFORMANCE
The committee shall review and reassess the charter at least annually and
obtain the approval of the board of directors for any proposed changes to the
charter. The committee shall evaluate its own performance on an annual basis.