2003 Committee Charter : BLS

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BELLSOUTH BOARD OF DIRECTORS
AUDIT COMMITTEE
CHARTER
The Audit Committee shall be appointed by the Board of Directors and shall meet the size,
independence and experience requirements of applicable statutes and regulations and the New
York Stock Exchange Listing Standards as may be in effect from time to time. The Audit
Committee shall provide assistance to the Board of Directors in fulfilling its responsibility to
the shareholders, potential shareholders and the investment community with respect to its
oversight of:
  • The quality and integrity of the Company's financial reporting;
  • The Company's system of internal controls;
  • The performance of the Company's internal audit staff;
  • The independent accountant's qualifications, independence and performance; and
  • The Company's system of compliance and business conduct.
    In meeting its responsibilities, the Audit Committee shall:
    I. General
    1. Meet in conjunction with each regularly scheduled meeting of the Board of Directors,
    or more frequently as circumstances require.
    2. Review and assess the Committee's activities and the adequacy of this charter, on an
    annual basis, to ensure it is meeting its responsibilities to the Board of Directors.
    Perform an annual performance evaluation.
    3. Report Committee actions to the Board of Directors with such recommendations as the
    Committee may deem appropriate.
    4. Request and review such reports and receive such assistance from management as it
    may from time to time require in carrying out its assigned responsibilities.
    5. Engage independent counsel and other advisors as it determines is necessary to carry
    out its duties and conduct or authorize investigations into any matters within its scope
    of responsibilities. The Company shall provide appropriate funding for such advisors as
    determined by the Committee.
    6. Prepare and approve for inclusion in the Company's annual proxy statement the Audit
    Committee report required by the rules of the Securities and Exchange Commission.
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    7. Undertake from time to time such additional activities within the scope of the
    Committee's primary functions, as the Committee deems appropriate.
    II. Quality and Integrity of Financial Reporting
  • Provide oversight of the financial reporting process, which shall include the following:
    1. Review management's process for ensuring the quality and integrity of the
    financial reports.
    2. Review the Company's critical accounting policies and reporting controls
    and procedures.
    3. Review with management and the independent accountant the Company's
    interim and annual financial statements, MD&A, footnotes, and other
    associated required communications.
    4. Review with management and the independent accountant at the completion
    of the annual audit the independent accountant's audit of the financial
    statements and report thereon, any serious difficulties or disputes with
    management encountered during the course of the audit, and other matters
    related to the conduct of the audit which are to be communicated to the
    Committee under generally accepted auditing standards.
    5. Review with management press releases related to the Company's financials.
    III. System of Internal Controls
    1. Review with management, the independent accountant and the Chief Corporate
    Auditor the quality and adequacy of internal controls that could significantly affect the
    Company's financial statements.
    2. Review with management, the independent accountant and the Chief Corporate
    Auditor issues related to the system of internal controls, including significant audit
    findings and recommendations, together with management's response.
    IV. Performance of Internal Audit
    1. Review with management and the Chief Corporate Auditor the charter, plans, activities,
    staffing and organizational structure of the internal audit function.
    2. Review the effectiveness of the internal audit function, including compliance with
    professional standards.
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    3. Review with the Chief Corporate Auditor and the independent accountant the
    completeness of coverage of key business controls and risk areas, including the
    effective use of audit resources and scope of the audit plan.
    4. Periodically, at least quarterly, meet separately with the Chief Corporate Auditor to
    cover any matters that should be discussed in private. Meet separately with members of
    management when necessary.
    V. Independent Accountant Qualifications, Independence and Performance
    1. Ensure the independence of the independent accountant by reviewing and discussing
    with the Board of Directors, if necessary, any relationships between the independent
    accountant and the Company, or any other relationship that may adversely affect the
    accountant's independence.
    2. Appoint, and/or dismiss, approve the compensation, and provide oversight of the work
    of the independent accountant employed by the Company for the purpose of preparing
    or issuing the Company's annual audit report or related work.
    3. Review the scope and approach of the annual audit with the independent accountant.
    4. Pre-approve all auditing services and allowable non-audit services provided to the
    Company by the independent accountant. The Committee may delegate the authority to
    grant pre-approval of auditing or allowable non-audit services to one or more members
    of the Committee. Each pre-approval decision pursuant to this delegation will be
    presented to the full Committee at its next scheduled meeting for ratification.
    5. Consider reports from the Company's independent accountant on:
    a. The Company's critical accounting policies and practices;
    b. All alternative treatments of financial information permitted within
    generally accepted accounting principles related to material items that
    have been discussed with management, the ramifications of the use
    of such treatments and the treatment preferred by the firm;
    c. All other material written communications between the firm and
    management; and
    d. All other required communications.
    6. Review with the independent accountant and management any disagreement with the
    Company's annual reporting and ensure resolution.
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    7. Periodically, at least quarterly, meet separately with the independent accountant to
    cover any matters that should be discussed in private.
    VI. System of Compliance and Business Conduct
    1. Review with the Company's general counsel and others any legal, tax, or regulatory
    matters that may have a material impact on Company operations and the financial
    statements, related Company compliance policies, and programs and reports received
    from regulators. Review the Company's process for communicating a code of ethical
    conduct.
    2. Establish procedures for:
    a. The receipt, retention, and treatment of complaints received by the Company
    regarding accounting, internal accounting controls, or auditing matters; and
    b. The confidential, anonymous submission by employees of the Company of
    concerns regarding questionable accounting or auditing matters.
    3. Review transactions with the Company in which Directors or officers of the Company
    have an interest.
    The Audit Committee serves in an oversight capacity and as such does not determine or
    provide opinions on the completeness, accuracy, or adherence to generally accepted accounting
    principles of the Company's financial statements.
    As amended effective September 22, 2003.