BRIGGS & STRATTON CORPORATION
AUDIT COMMITTEE CHARTER
The primary functions of the Audit Committee of the Board of Directors shall be to assist Board oversight of (i) the integrity of the Company's financial statements, (ii) the Company's compliance with legal and regulatory requirements, (iii) the independent auditor's qualifications and independence, and (iv) the performance of the Company's internal audit function and independent auditors. The Committee shall also prepare the report of the Audit Committee that SEC rules require be included in the Company's annual proxy statement.
Management remains responsible for preparing and filing the Company’s financial statements as required by the SEC, for conducting investigations, and for assuring the Company operates in accordance with applicable law.
The members of the Committee shall consist of
three or more directors appointed by the Board. The Committee shall meet the
financial expertise and independence requirements, including
compensation-related provisions, established by the SEC and
Unless a chairman is appointed by the Board, the members of the Committee may designate a Chairman by majority vote of the full Committee membership.
The Board shall determine whether a member of the Committee meets the SEC standard for designation as an audit committee financial expert. Designation as an audit committee financial expert does not affect the duties or liability of such member.
The Committee shall meet at such times as it determines to be necessary or appropriate, but not less than four times each year, and shall report to the Board at the next meeting of the Board following each such Committee meeting. The Committee may request any employee of the Company or the Company’s outside counsel or independent auditor to attend a Committee meeting or meet with the Committee's members or consultants.
IV. Responsibilities and Duties
The Committee's responsibilities and duties shall include the following:
1. Meet periodically with management to review:
(a) Major financial risk exposures and steps management has taken to monitor and control such exposures.
(b) Major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and major issues regarding the adequacy and effectiveness of the Company's internal controls.
(c) Significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
(d) The effect of regulatory and accounting initiatives on the financial statements of the Company.
2. Review the Company’s quarterly financial statements and annual audited financial statements with management and the independent auditor prior to filing or distribution. The reviews shall include without limitation:
(a) Major issues regarding accounting and auditing principles and practices.
(b) Earnings press releases and financial information and earnings guidance provided to analysts and rating agencies, including any pro forma or adjusted non-GAAP information.
(c) With respect to quarterly financial statements, (i) disclosures under the MD&A section, and (ii) management's report on any significant deficiencies in the design or operation of internal controls and procedures and on any fraud that involves management or other employees who have a significant role in the Company's internal controls.
(d) With respect to annual audited financial statements, (i) disclosures under the MD&A section, (ii) management's assessment of the effectiveness of internal controls and procedures, (iii) the independent auditor's report on such assessment, (iv) all critical accounting policies and practices to be used, (v) all alternative treatments within GAAP for policies and practices related to material items that the independent auditor has discussed with management, including ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the
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independent auditor, and (vi) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
3. Meet periodically with the chief financial officer, the internal audit manager and the independent auditor in separate executive sessions.
Oversight of Independent Auditor
1. Appoint the independent auditor, approve in advance all audit and non-audit services to be provided by the independent auditor, and approve the fees to be paid by the Company to the independent auditor. The Audit Committee may delegate pre-approval authority to the Chairman, which if exercised shall be reported to the Committee at its next scheduled meeting.
2. Meet with the independent auditor prior to the annual audit to review the planning and staffing of the audit and a report from the independent auditor regarding the auditor’s independence and its internal quality control procedures.
3. Resolve any disagreement between management and the auditor regarding financial reporting, review any special audit steps adopted in light of material control deficiencies, and review with the independent auditor any changes required in the planned scope of the external audit.
4. At the conclusion of the annual audit, discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61. These matters include the auditor's responsibilities under GAAP, significant accounting policies, accounting estimates, significant audit adjustments, other information provided by the auditor in audited financial statements, any disagreements with management about matters that could be significant to the audited financial statements, significant matters that management may have discussed with other auditors, major issues discussed with management prior to retention of the auditor, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.
5. Meet privately with the independent auditor to discuss any matters that the Committee or auditor feels should be discussed, including without limitation the quality of management, financial, accounting and internal audit personnel, and whether any restrictions have been placed by management on the scope of the auditor's examination.
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6. Decide whether to retain or terminate the services of the independent auditor.
7. Establish policies to govern hiring by the Company of any employee or former employee of the independent auditor.
Review of Internal Audit Department
1. Review the appointment and replacement of the internal audit manager.
2. Review the significant reports to management prepared by the internal audit department and management’s responses.
3. Review and approve the internal audit charter that explains the functional and organizational framework for providing services to management and to the Audit Committee, including the purpose, responsibility, authority and reporting relationships of the internal audit functions.
4. Annually review the internal audit plans, budgets, objectives and goals.
Other Audit Committee Responsibilities
1. Retain at the Company’s expense legal, accounting or other consultants to advise the Committee.
2. Advise the Board whether a Committee member meets the SEC standard for an audit committee financial expert.
3. Establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting control or auditing matters, and for the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
4. Review and approve any waiver of any policy in the Company's Business Integrity Manual affecting any director or Board-elected officer.
5. On an annual basis or more often if appropriate:
(a) Review a report from management concerning the Company's Integrity Program and compliance with applicable law.
(b) Review a report from the Company’s General Counsel concerning legal matters that may have a material impact on the financial statements or may involve material reports or inquiries received from regulators or governmental agencies.
(c) Prepare the report required by the SEC to be included in the Company’s annual proxy statement.
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(d) Evaluate the performance of the Committee.
(e) Review and assess the adequacy of this Charter and recommend any proposed changes to the Board for approval.