AUDIT COMMITTEE CHARTER
I. Audit Committee Purpose
The Audit Committee (the “Committee”), in its capacity as a committee of the Board,
shall assist the Board in overseeing:
− the integrity of the Company's financial statements,
− the compliance by the Company with all applicable laws, regulations and corporate
− the independent auditor's qualifications and independence, and
− the performance of the Company's internal audit function and independent auditor.
The Audit Committee shall prepare an audit committee report as required by the SEC
to be included in the Company’s proxy statement.
While the Committee has the responsibilities and powers set forth in this Charter, it is
not the responsibility or duty of the Committee to plan or conduct audits, to guarantee
the auditor's report, to certify the Company's financial statements or to determine that
the Company’s financial statements are complete and accurate and are in accordance
with generally accepted accounting principles or applicable rules and regulations. It is
also not the responsibility of the Committee to ensure compliance with laws and regulations
or with the Company's Policies of Business Conduct. These are the responsibilities
of management and the independent auditor, as appropriate.
II. Audit Committee Authority
The Committee has the sole authority to, and shall directly, appoint, retain, evaluate
and terminate the Company's independent auditor, which shall report directly to the
Committee. The Committee shall be directly responsible for determining the compensation
(including as to fees and terms) and oversight of the work of the Company's independent
auditor (including resolution of disagreements between management and
the independent auditor regarding financial reporting). The Committee shall have the
sole authority to, and shall pre-approve all auditing services and permitted non-audit
services performed for the Company by the independent auditor, subject to applicable
laws, rules and regulations. The Committee has the authority, without Board approval,
to retain, at the Company's expense, independent or outside legal, accounting,
or other advisors of its choice as it deems necessary or appropriate in the performance
of its duties. The Company shall provide appropriate funding, as determined by the
Committee, for payment of compensation to such advisors employed by the Committee,
to any registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services for the
Company and for ordinary administrative expenses of the Committee that are necessary
or appropriate in carrying out its duties.
The Committee may request any officer or employee of the Company or the Company's
counsel or independent auditor to attend any meeting of the Committee or to
meet with any members of, or consultants to, the Committee.
The Committee may delegate authority to an individual member of the Committee or
to subcommittees to the extent permitted by applicable laws, rules and regulations, including
those of the
III. Audit Committee Membership and Meetings
The Committee shall be comprised of three or more independent directors appointed
annually by the Board. Each member shall comply with and satisfy requirements of
the New York Stock Exchange and all other applicable laws, rules and regulations and
may be removed by the Board of Directors in its discretion. If a Committee Chairman
is not designated or present, the members of the Committee may designate a Chairman
by majority vote of the Committee membership present at the meeting.
All members of the Committee shall be financially literate, as such qualification is interpreted
by the Board in its business judgement, or must become financially literate
within a reasonable time after his or her appointment to the Committee. In addition,
at least one member of the Committee shall have accounting or related financial management
expertise, as determined by the Board in its business judgment.
The Committee shall meet at stated times four times per year, or more frequently as
circumstances dictate. Meetings of the Committee shall be called by the Chairman of
the Committee or the Chief Executive Officer of the Company. All meetings of the
Committee shall be held pursuant to the Bylaws of the Company with regard to notice
and waiver thereof, and written minutes of each meeting shall be duly filed in the
Company's records. Reports of meetings of the Committee shall be made to the
Board at its regularly scheduled meeting following the Committee meeting accompanied
by any recommendations to the Board approved by the Committee.
Periodically, the Committee shall meet with management, the director or senior representative
of internal audit and the independent auditor in separate sessions to discuss
any matters that the Committee or any of the aforementioned believes should be discussed.
IV. Audit Committee Responsibilities and Duties
The Committee shall:
1. Discuss with management and the independent auditor the annual audited
financial statements, including disclosures made in management's
discussion and analysis, and any related certifications required to be
made by any officer of the Company, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
2. Discuss with management and the independent auditor the Company's
quarterly financial statements, including disclosures made in management's
discussion and analysis, and any related certifications to be made
by any officer of the Company, including the results of the independent
auditor's reviews of the quarterly financial statements.
3. Review the Company's disclosure controls and procedures and the certifications
required to be made by any officer of the Company in each of
the Company's quarterly reports on Form 10-Q and the Company's annual
report on Form 10-K.
4. Discuss with management the Company's earnings press releases, including
the type and presentation of information to be included therein,
as well as financial information and earnings guidance provided to analysts
and rating agencies. The Committee's responsibility to discuss
earnings releases as well as to review any financial information and
earnings guidance may be done generally (i.e., discussion of the types
of information to be disclosed and the type of presentation to be made).
The Committee need not discuss in advance each earnings release or
each instance in which the Company may provide earnings guidance.
5. Prepare a report to shareholders to be included in the Company’s annual
proxy statement in accordance with applicable laws, rules and
6. Discuss with management and the independent auditor 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 as to the adequacy of the
Company's internal controls and any special audit steps adopted in light
of material control deficiencies.
7. Review with management and/or the independent auditor, and discuss
as necessary, all 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
8. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the Company's financial statements.
9. Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk management
10. Review and assess any legal, regulatory and environmental matters that
may have a material impact on the Company's financial statements.
11. Review the adequacy of internal controls and the activities of the Company’s
internal audit department, including the proposed annual audit
plan, periodic reports on the status of the plan, assessments of the
Company’s risk management processes and system of internal control,
and summaries of any significant issues raised during the performance
of internal audits.
12. Review and assess compliance with all applicable rules and regulations
of the SEC
to the composition and responsibilities of the Audit Committee.
13. Review annually the Company's Policies of Business Conduct, which
prohibits unethical or illegal activities by the Company's directors, offi-
cers and employees, as well as review the actions taken to monitor
compliance with the Code.
14. Recommend to the Board any waivers for directors or executive officers
proposed to be granted, and review any material waivers for nonexecutive
officers or employees granted by the General Counsel, pursuant
to the Company's Policies of Business Conduct.
B. Independent Auditors
The Committee shall:
1. Set clear policies for the Company's hiring of employees or former employees
of the independent auditor who were engaged on the Company's
2. Review and evaluate the experience and qualifications of the lead (or
coordinating) partner of the independent auditor.
3. Obtain and review a report from the independent auditor at least annually
describing (a) the auditor's internal quality-control procedures, (b)
any material issues raised by the most recent quality-control review, or
peer review, of the firm, 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 firm and any
steps taken to deal with any such issues, and (c) in order to assess the
auditor's independence, all relationships between the independent auditor
and the Company. Evaluate the qualifications, performance and independence
of the independent auditor, taking into account the foregoing
report, the services provided by the independent auditor and the
opinions of management and the internal auditor. In addition to ensuring
the regular rotation of the lead audit partner as required by law, the
Committee should further consider whether, in order to ensure continuing
auditor independence, there should be regular rotation of the audit
firm itself. The Committee shall present it conclusions to the full
4. Discuss with the independent auditor any matters required to be discussed
in accordance with SAS 61 relating to the conduct of the audit.
In particular, discuss:
(a) the adoption of, proposal of, or changes to, the Company's significant
auditing and accounting principles and practices as suggested
by the independent auditor, internal auditors or management;
(b) any management or internal control letter provided, or proposed
to be provided, by the independent auditor and the Company's response
to that letter; and
(c) any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to requested
information, and any significant disagreements with management.
5. Review with the independent auditor and financial management of the
Company the scope and staffing of the proposed audit for the current
year and, at the conclusion thereof, review such audit including any
comments or recommendations of the independent auditor.
6. Review with the independent auditor any audit problems or difficulties
and management's response.
7. Receive, and take any required or appropriate action in relation to, all
reports and other communications which the independent auditor is required
to make to the Audit Committee, including timely reports concerning:
(a) all critical accounting policies and practices to be used;
(b) all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management
officials of the Company, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor; and
(c) other material written communications between the independent
auditor and the management of the Company, such as any management
letter or schedule of unadjusted differences.
8. Discuss with the independent auditors their judgments about the quality,
not just the acceptability, of the Company's accounting principles as
applied in its financial reporting.
9. Obtain assurance from the independent auditor that the Company is in
compliance with the provisions of Section 10A of the Securities Exchange
Act of 1934, as amended.
C. Other Audit Committee Responsibilities
The Committee shall:
1. Review and reassess the adequacy of this Charter and the Committee's
own performance annually or more often as conditions dictate, and recommend
proposed changes to the Board.
2. Review the appointment, performance and replacement of the senior internal
auditing executive and the performance of the internal audit
3. Establish procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting
controls or auditing matters, as well as for confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.
4. Perform any other activities consistent with this Charter, the Company’s
By-laws and as the Committee or the Board deems necessary or