Charter of the Audit Committee of the Board of Directors
The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities relating to: the auditing and accounting practices of the Company; the adequacy and integrity of the Company's systems of internal controls and financial reporting processes; and the reliability of the Company's financial reports to the public. The Committee's primary duties and responsibilities are to:
§ Serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system.
§ Review and appraise the activities of the internal and external auditors.
§ Provide an open avenue of communication among the external and internal auditors, financial and senior management, and the Board of Directors.
The Committee is responsible for producing the 'Report of the Audit Committee' required by the rules of the Securities and Exchange Commission (the "SEC") to be included in the Company's annual proxy statement and overseeing the activities of the external auditors. The external auditors are ultimately accountable to the Audit Committee and Board of Directors as representatives of the stockholders. The internal auditors and external auditors report directly to the Committee. The Chief Compliance Officer reports to this Committee and to the Human Resources/Corporate Governance Committee.
The Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section IV of this Charter.
1. The Committee shall be comprised solely of at least three independent directors appointed annually by the Board upon nomination by the Corporate Governance and Nominating Committee. Members of the Committee will be considered independent if they meet the criteria for independence required by NASDAQ and section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC. Each member of the Committee shall be able to read and understand financial statements. At least one member of the Committee shall be a financial expert as defined by the SEC. Committee members may be replaced at the discretion of the Board.
2. The Committee has the sole authority to retain independent counsel and other advisors at the expense of the Company and to approve fees and other retention terms of such advisors.
3. The Committee may form and delegate authority to subcommittees when appropriate.
The Committee will meet at least four times annually, or more frequently as circumstances dictate in addition to the conference calls to discuss the financial statements prior to release of earnings where the Chairman or his designee may represent the entire Committee. The Committee Chairman reviews and approves the proposed agenda in advance of each meeting. The Committee will meet separately with the Chief Financial Officer, Chief Accounting Officer, Chief Compliance Officer, the internal auditors and the external auditors in executive sessions at least four times annually to discuss any matters that the Committee or each of these groups believes should be discussed privately. The Committee will also meet in executive session at each meeting.
IV. RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities, the Committee believes that its policies and procedures should remain flexible in order to react to changing conditions and to ensure the effective oversight of the company's reporting process and internal control system. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles ("GAAP"). This is the responsibility of management and the external auditor. Nor is it the duty of the Committee to conduct investigations or to assure compliance with laws and regulations and the Company's Code of Conduct.
Specific responsibilities and duties of the Committee:
Financial Reporting Processes
1. Review, in consultation with the external auditor, the results of the annual audit giving specific attention to the following:
Ethical and Legal Compliance
1. Make regular reports to the Board.
2. Review policies and procedures with respect to officers’ expense accounts including their use of company assets and consider the results of any review of these areas by the internal or external auditors.
3. Review and approve all “related party transactions.” “Related party transactions” are defined as any transaction, or series of similar transactions, between the Company (or any subsidiary) and (1) any director or corporate officer; (2) any nominee for director; (3) any person or entity known to hold more than 5% of Andrew stock; or (4) any immediate family member of any of the foregoing persons.
4. Annually conduct a self-assessment of the Committee’s performance.
5. Perform any other activities consistent with this Charter, the Company's by-laws, and governing law as the Committee or the Board deems necessary or appropriate.