AGL RESOURCES INC.
2003 Committee Charter : ATG
The Audit Committee (the "Committee") of AGL Resources Inc., a Georgia corporation (the
"Company"), is a committee of the Board of Directors of the Company. Its primary function is
to assist the Board in fulfilling its oversight responsibilities. The Committee shall monitor (a)
the integrity of the Company's financial statements, (b) the Company's compliance with legal
and regulatory requirements, (c) the independent auditor's qualifications and independence, and
(d) the performance of the Company's internal audit function and the independent auditor. 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 retain outside legal, accounting or other advisors, at the expense of the
Company, to advise the Committee. The Committee shall produce an annual report for inclusion
in the Company's proxy statement for the annual meeting of stockholders, in accordance with
applicable rules and regulations. The composition and responsibilities of the Committee are
described in this Audit Committee Charter (the "Charter").
In accordance with Article III of the Bylaws of the Company, the Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may designate an Audit
Committee. The Committee shall consist of four (4) or more Directors. The Committee shall be
composed entirely of independent, non-employee Directors of the Company, in accordance with
applicable rules and regulations. Each member of the Committee shall be financially literate, as
defined by applicable rule or regulation and by the Board of Directors, or must become
financially literate within a reasonable period of time after his or her appointment to the
Committee. Additionally, the Board will ensure that at least one member of the Committee will
have accounting or related financial management expertise and will qualify as a financial expert
as defined by the Securities and Exchange Commission.
The members of the Committee shall serve at the pleasure of the Board of Directors or until their
successors shall be duly designated. Vacancies in the Committee shall be filled by the Board of
The Audit Committee, subject to approval by the entire Board of Directors, where appropriate,
1. Provide an open avenue of communication among the Board of Directors, the internal
auditors, and the independent auditor for the Company.
2. Review with the Internal Audit Director and the independent auditor the coordination
of the internal and independent audit efforts.
3. Review with management, the independent auditor and the internal auditors, as
appropriate, audit policies and procedures and the scope and extent of audits. In
consultation with management, the independent auditor, and the internal auditors,
consider the integrity of the Company's financial reporting processes and controls.
4. Retain and terminate the Company's independent auditor, with sole authority to preapprove,
to the extent required by applicable law, all audit engagement fees and
terms, as well as all non-audit engagements with the independent auditor. In
accordance with applicable law, the Committee may delegate this authority to one or
more designated members of the Committee; provided that any such decision made
pursuant to the foregoing delegation of authority shall be presented to the Committee
at its next regularly scheduled meeting.
5. Oversee the work of the independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting) for
purposes of preparing or issuing an audit report or related work. Such independent
auditor shall report directly to the Committee.
6. Review and concur in the appointment, replacement, reassignment, or dismissal of
the Internal Audit Director for the Company. Confirm the functional independence of
the internal auditors by assuring that the Internal Audit Charter requires the Internal
Audit Department to function independently and by inquiring of the Internal Audit
Director regarding Internal Audit's functional independence.
7. Discuss with management, the Internal Audit Director and the independent auditor
the Company's policies with respect to risk assessment and risk management.
Review and discuss the steps management has taken to identify, monitor, control and
report the Company's major financial risks.
8. Review with the Chief Compliance Officer the status of the Company's compliance
program and any compliance-related issues arising within the Company. Review and
approve procedures established by management for (i) the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters, and (ii) the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters. Review with the Internal Audit Director and the
Chief Compliance Officer the results of Internal Audit's review of the Company's
monitoring of compliance with the Company's Code of Conduct.
9. Consider and review with management and with the Internal Audit Director:
a. Significant findings during the year and management's responses thereto.
b. Any difficulties encountered in the course of Internal Audit's reviews, including
any restrictions on the scope of their work or in access to required information.
c. Any significant changes to the audit plan of Internal Audit.
d. Any significant issues related to the budget and staffing of Internal Audit.
e. Any changes to the Charter of Internal Audit.
10. Review policies and procedures with respect to officers' expense accounts and
perquisites, including their use of corporate assets, and consider the results of any
review of such matters by the internal auditors or by the independent auditor.
11. Report Committee actions to the Board of Directors, at the Board's next regularly
scheduled meeting following such actions, with such recommendations as the
Committee may deem appropriate.
12. Perform such other duties and responsibilities as required by law or as authorized or
required by the Bylaws of the Company or by the Board of Directors.
13. At least quarterly, meet with the Internal Audit Director, the Chief Compliance
Officer, the Chief Financial Officer, the independent auditor, and any members of
management with whom it would like to meet in separate executive sessions to
discuss any matters that the Committee or these groups believe should be discussed
privately with the Audit Committee.
14. Meet quarterly with management and the independent auditor, to discuss: (i) in the
case of the first quarter of each fiscal year, the annual audited financial statements for
the prior fiscal year, including footnotes; (ii) in the case of all other quarters, the
unaudited quarterly financial results prior to the release of earnings and/or the
quarterly financial statements prior to filing or distribution; including, in each case, a
discussion of the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations". Discuss earnings press
releases as well as financial information and earnings guidance provided to analysts
and rating agencies.
15. Review, at least annually, with financial management and/or the independent auditor
the adequacy of internal accounting procedures and controls, including a review of
the evaluation of the Company's internal controls and discuss significant items with
management. Review quarterly any deficiencies in the design or operation of internal
controls or any material weaknesses in internal controls that are reported to the
Committee by financial management, the Internal Audit Director or the independent
16. Review with management the report by the independent auditor required under §204
of the Sarbanes-Oxley Act of 2002 addressing: (i) critical accounting policies and
practices to be used, (ii) alternative treatments of financial information within
generally accepted accounting principles and ramifications of the use of such
alternative treatments and the treatment preferred by the independent auditor and (iii)
other material written communications between the independent auditor and
17. Annually review the qualifications, independence and performance of the
independent auditor and present its conclusions to the Board of Directors. As part of
such annual review, obtain and review a written report by the independent auditor
describing: all relationships between the independent auditor and the Company; the
independent auditor's internal quality-control procedures; any material issues raised
by the most recent internal quality-control review, or peer review, of the independent
auditor, 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 independent auditor; and any steps taken to deal with any
such issues. Discuss with the independent auditor all significant relationships it has
with the Company that could impair the auditor's independence. Discuss with the
independent auditor any legally required audit partner rotation. Discuss with
management the qualifications, independence and performance of the independent
auditor, including specifically the lead audit partner.
18. Review with management and the independent auditor at the completion of the
examination of the annual financial statements:
a. The independent auditor's audit of the financial statements and their report
b. Passed audit adjustments.
c. Any significant changes required in the independent auditor's audit plan.
d. Any serious difficulties or disputes with management encountered during the
course of the independent auditor's audit and management's response thereto.
e. Other matters related to the conduct of the independent auditor's audit which are
to be communicated to the Audit Committee under auditing standards generally
accepted in the United States of America.
f. The responsibilities, budget and staffing of the Company's internal audit function.
19. Establish and review, at least annually, policies dealing with the Company's ability to
hire current or former employees of the independent auditor.
20. Report regularly to the Board of Directors, after the close of each fiscal year but prior
to the Company's annual meeting of stockholders, any issues that arise with respect
to the quality or integrity of the Company's financial statements, the Company's
compliance with legal or regulatory requirements, the performance and independence
of the independent auditor, the performance of the internal audit function, or
whatever it deems appropriate concerning the activities of the Committee.
21. Report annually to the shareholders, describing the Audit Committee's composition
and responsibilities, and any other information required by applicable rule or
regulation to be communicated.
22. At least annually, review the Audit Committee's Charter, evaluate the performance of
the Committee, and confirm that all responsibilities outlined in this Charter have been
The Committee shall meet at least quarterly. During each meeting, the Committee shall have the
opportunity to meet in executive sessions with the independent auditor, the Internal Audit
Director and the Chief Compliance Officer. The Committee may ask members of management
or others to attend its meetings and to provide pertinent information as necessary.
The Committee shall keep written minutes of each meeting, which shall set forth the
Committee's actions as required by the Committee Charter, and shall be duly filed in the
Company's records. Reports of meetings of the Committee shall be made to the Board of
Directors at its next regularly scheduled meeting following the Committee meeting,
accompanied by any recommendations to the Board of Directors approved by the Committee.
Director's fees are the only compensation an Audit Committee member may receive from the