BUILDING MATERIALS HOLDING CORPORATION
AUDIT COMMITTEE CHARTER
Approved and Adopted
November 26, 2002,
1. Authority and
The Audit Committee (the "Committee") is a standing committee of the Board of Directors which acts on behalf of the Board of Directors (the "Board") in fulfilling its responsibility to oversee (1) management's conduct of the Company's financial reporting, including overview of the financial reports and other financial information provided by the Company to any governmental or regulatory body, the public or others, (2) the Company's systems of internal accounting, financial controls, and internal audit, (3) the annual independent audit of the Company's financial statements and selection of an independent auditor, and (4) the Company's legal compliance programs. The Committee is also responsible for (1) the appointment, compensation and oversight of any independent public accounting firm employed by the Company to audit its financial statements and (2) the review and approval of all audit and permitted non-audit services provided by the Company's independent public accounting firm. The selected independent public accounting firm shall report directly to the Committee.
The Committee shall consist of at least three directors appointed by the Board of Directors, who shall be (i) independent of management and free from any relationship that, in the opinion of the Board, would interfere with exercise of independent judgment as an Audit Committee member, and (ii) independent under the rules of Nasdaq for Nasdaq National Market companies. Each member must be financially literate, and one member shall be a "financial expert" as such term is defined in rules promulgated from time to time by the SEC. The Board of Directors shall designate one of the Audit Committee members to be Chairperson.
3. Duties and Responsibilities.
The Committee's role is one of oversight and it recognizes that the Company's management is responsible for preparing the Company's financial statements and the independent auditors are responsible for the audit of the financial statements. The Committee is not providing any expert or special assurance as to Company's financial statements or any certification of the work of the outside auditors. The Committee shall, in addition to other responsibilities as may be assigned from the Board from time to time:
(i) Evaluate, appoint, authorize and set the compensation of and oversee the firm of independent certified public accountants to be appointed as auditors of the Company to perform the annual audit. Pre-approve all permissible non-audit services.
(ii) Review with the independent auditors and management the scope of the audit, the results of the annual audit examination by the independent auditors, any reports of the independent auditors with respect to the interim periods, and, with the internal auditor or the Company, the scope and results of the internal audit program. The Committee will prepare the report required by the rules of the SEC to be included in the Company's annual proxy statement.
(iii) Meet with the Company's independent accounting firm to review and discuss (i) all of the Company's critical accounting policies and practices used in the preparation of its financial statements, (ii) all alternative treatments of financial information within GAAP that have been discussed with management, the ramifications of their use and the treatment preferred by the Company's independent accounting firm and (iii) other matters, including management letters and schedules of adjustments that have not been recorded.
(iv) Develop procedures for handling complaints regarding accounting, internal controls or auditing matters, including procedures for confidential, anonymous submission of legitimate concerns by employees regarding accounting or auditing matters.
(v) Review with management and the Company's independent public accountants, prior to filing and release, the Company's periodic reports on Form 10-Q and Form 10-K, including the Company's MD&A disclosures, material financial press releases and any guidance to be provided to analysts.
(vi) Review with management and the Company's independent public accountants procedures for certifications required by the Sarbanes-Oxley Act of 2002.
(vii) Review the written statement from the outside auditor of the Company concerning any relationship between the auditor and the Company or any other relationship that may adversely affect the independence of the auditor and assess the independence of the outside auditor as required under Independent Standard Boards, Standard No. 1.
(viii) Review the adequacy of the Company's administrative and financial controls, with particular emphasis on the scope, performance and reports of the internal audit function.
(ix) Review the Company's risk assessment and risk management policies.
(x) Review significant changes in the accounting policies of the Company and accounting and financial reporting proposals that may have a significant impact on the Company's financial reports, and make recommendations to the Board regarding the same.
(xi) Consult and review with the Company's general counsel as to any potentially material pending or threatened claims, governmental inquiries or investigations. Review with the Company's general counsel the Company's compliance programs.
(xii) Review and make recommendations to the Board regarding the annual budget for the Company developed by management.
(xiii) Review annually the adequacy of the Committee's Charter and assess the Committee's processes and effectiveness.
(xiv) Review and approve all transactions with affiliates or related parties.
(xv) Have full authority (without seeking further approval of the Board) to engage independent counsel and other advisors to provide advice to the Committee from time to time as it deems necessary and shall have full authority (without seeking further approval of the Board) to authorize and set appropriate compensation of such counsel and other advisors.
(xvi) Review the Company's Code of Business Conduct; make recommendations to the Board regarding changes to the Code of Business Conduct and monitor reports of violations and enforcement of the Code of Business Conduct.
The Committee will meet as often as in its judgment is necessary, but no less frequently than quarterly. The Committee may meet either in person or telephonically and at such times and places as the Committee determines. The Committee shall report the results of each of its meetings to the Board. The Committee shall have the right to retain and meet privately with independent advisors as needed. A majority of the members of the Committee shall constitute a quorum.