2003 Committee Charter : ESV
THE BOARD OF DIRECTORS
ENSCO INTERNATIONAL INCORPORATED
The Audit Committee ("Committee") will assist the Board of Directors in fulfilling its
oversight responsibilities, including those which relate to (i) the integrity of the
Company's financial statements, (ii) the Company's compliance with legal and
regulatory requirements, (iii) the auditor's (as defined below) qualifications and
independence and (iv) the performance of the Company's Internal Audit Department and
the auditor. In performing its duties, the Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and external
auditors. As used herein, the term "auditor" means the independent public accounting
firm engaged to perform the Company's audit required by the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The Committee shall be comprised of three or more Directors who are independent as
defined in the Company's Corporate Governance Policy and by applicable laws, rules
and regulations. Committee members shall not simultaneously serve on the audit
committees of more than two other public companies unless approved by the Board of
Committee members shall be appointed by the Board of Directors. The Committee shall
appoint one member Committee Chairman following each Annual Meeting of
Stockholders or whenever a vacancy occurs.
Each Committee member shall be financially literate, as such qualification is interpreted
by the Board of Directors in its business judgment in accordance with applicable laws,
rules and regulations.
At least one of the Committee members shall have financial management expertise, such
qualification to be determined by the Company's Board of Directors in accordance with
and as required by applicable laws, rules and regulations.
The Committee is granted the authority to:
which direction includes the authority to directly approve the auditor's audit
engagement fees and terms;
the Company and its subsidiaries by the auditor and its member firms, subject to the
de minimis exceptions for non-audit services detailed in Section 10A(i)(1)(B) of the
Exchange Act, and the rules and regulations promulgated thereunder.
requested by the members of the Committee; and
assist the Committee in fulfilling its responsibilities and engage independent legal
counsel and other advisors regarding accounting or audit practices or other issues
pertinent to the Committee.
The Company shall provide for appropriate funding, as determined by the Committee, for
payment of compensation to the auditor for the purpose of rendering or issuing an audit
report and to any advisors employed by the Committee. The auditor shall report directly
to the Committee.
The Committee is to meet as many times as the Committee deems necessary. At a
minimum, the Committee shall meet quarterly to discuss annual and quarterly financial
statements with the auditor and management.
A written agenda for each meeting should be prepared and distributed to the Committee
members and Board members in advance, along with any other relevant information.
As necessary or desirable, the Committee may request that members of management and
representatives of the auditor be present at meetings of the Committee.
Additional attendees and matters to be reviewed at Committee meetings shall include the
of audits and the current audit plan status.
matters that may have a significant impact on the Company's financial statements.
The General Counsel also shall annually advise the Committee of, and the Committee
shall discuss, the guidelines and policies by which the Company undertakes risk
assessment and risk management, including the availability and cost of insurance.
the General Counsel, the internal auditors and Company management in separate
The Company's Director - Tax shall periodically report to the Committee on tax
matters that may have a significant impact on the Company's financial statements.
The Secretary or Assistant Secretary of the Company, or other such person as the
Committee shall appoint, will prepare the minutes of each meeting and distribute a copy
of the minutes to the Committee members and the other Directors.
The Committee shall be empowered in accordance with its judgment to:
1. Review with the Company's management and auditor the Company's policies and
procedures to confirm Company management's opinion regarding the adequacy
of internal accounting, financial reporting and disclosure controls and procedures.
2. Inquire as to the extent to which internal and external auditors review computer
systems and applications, the security of such systems and applications, and the
contingency plan for processing financial information in the event of a system
3. Gain an understanding of whether internal control recommendations made by
internal and external auditors have been implemented by management.
Financial and SEC Reporting
4. Discuss the Company's annual audited financial statements and quarterly
financial statements with Company management and the auditor, including the
Company's disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and other key content and
disclosures to be included in the Company's annual and quarterly reports filed
with the SEC.
5. Discuss earnings press releases, as well as financial information and earnings
guidance provided to analysts and rating agencies.
6. Review with management and the auditor, upon completion of their audit, the
audited financial results for the year prior to their release to the public. This
review is to encompass:
their application; and
accounting and SEC reporting, on the Company's financial statements;
on the Company's financial statements; and
include the audited financial results in the Company's Annual Report on Form
10-K filed with the SEC.
7. Provide its independent perspective to management for consideration in the
resolution of financial statement issues and for discussion of significant judgment
8. Review and approve the Audit Committee Report that is required to be included
in the Company's annual proxy statement under SEC rules.
9. Discuss with the auditor any disclosed relationships or services that may impact
the objectivity and independence of the auditor, discuss the auditor's
independence and take such further action as may be appropriate to verify the
10. At least annually, obtain and review a report from the auditor regarding (i) the
auditor's internal quality-control procedures; (ii) any material issues raised by the
most recent internal 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 (iii) all relationships
between the auditor and the Company. The Committee shall present their
conclusions with respect to the auditor to the full Board of Directors.
11. Review, prior to the annual audit, the scope and general extent of the auditor's
12. Review the auditor's identification of issues and business and financial statement
risks and exposures.
13. Review and discuss reports from the auditor on the following:
policies and practices related to material items that have been discussed with
Company management, including the ramifications of the use of such
alternative disclosures and treatments and the treatment preferred by the
management, such as any management letter or schedule of unadjusted
14. Inform the auditor and management that the auditor and the Committee may
communicate with each other at all times, and that the Committee Chairman may
call a meeting whenever he deems it necessary.
15. Instruct the auditor that the Committee expects to be advised if there are any areas
that require its special attention.
16. Evaluate the cooperation received from management by the auditor during their
audit examination, including their access to all requested records, data and
information. Also, elicit the comments of management regarding the
responsiveness of the auditor to the Company's needs. Inquire of the auditor
whether there have been any disagreements with management which if not
satisfactorily resolved would have caused them to issue a nonstandard report on
the Company's financial statements.
17. Discuss with the auditor the quality of the Company's financial and accounting
18. Review and approve the Internal Audit Department annual audit plan.
19. Review significant findings and management's response to internal audit reports,
including follow-up actions.
Related Party Transactions and Compliance With Codes Of Ethical Conduct
20. Review any proposed transaction between any Company officer or Director, or a
relative or affiliate of any officer or Director, and the Company or any of its
subsidiaries or affiliates to ensure that such "related-party" transactions are fair
and in the overall best interest of the Company.
21. Make, or cause to be made, all necessary inquiries of management and the auditor
concerning established standards of corporate conduct and performance, and
22. Review in-house policies and procedures for regular review of officers' expenses
and perquisites, including any use of corporate assets. Inquire as to the results of
the review and, if appropriate, review a summary of the expenses and perquisites
of the period under review.
23. Review the results of the Company's annual survey of compliance with the
Company's Code of Business Conduct Policy.
24. Establish procedures for the receipt, retention and treatment of complaints
received by the Company or Board of Directors regarding accounting, internal
accounting controls or auditing matters, and the confidential, anonymous
submission by Company employees of concerns regarding questionable
accounting, auditing or business conduct matters.
25. Review and discuss disclosures made to the Committee by the Company's
principal executive officer(s) and principal financial officer(s) during their
certification process for the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q regarding (i) any significant deficiencies and
material weaknesses in the design or operation of internal controls and procedures
for financial reporting or material weaknesses therein, and (ii) any fraud involving
Company management or other employees who have a significant role in the
Company's internal controls and procedures for financial reporting.
26. Apprise the Board of Directors, through routine Committee reports, distribution of
minutes and special presentations as necessary, of significant developments in the
course of performing the above duties.
27. Review the annual Board performance evaluation as it relates to the Committee,
and implement such measures as may be deemed appropriate to improve the
performance and administration of the Committee.
28. Annually review the Committee charter and recommend to the Board of Directors
any appropriate extension or changes in the duties of the Committee or revisions
of the Committee charter.
29. Set policies for the Company's hiring of employees or former employees of the
30. Require management to establish procedures for the receipt, retention and
treatment of reports by the Company's internal and external attorneys regarding
evidence of a material violation of an applicable United States federal or state
securities law, material breach of fiduciary duty arising under United States
federal or state law or similar material violation of any United States federal or
state law by the Company or any officer, director, employee or agent of the